Low paid, informal work is unlikely to be a stepping stone something better as promised

Via Billy Blog, I found this interesting report published by the OECD. It’s a report on inequality and it has this to say on what it calls “non-standard work”:

“Promoting equality of opportunities is not just about improving access to quality education but also ensuring that the investment in human capital is rewarded through access to productive and rewarding jobs. Before the crisis, many OECD countries were facing a paradoxical situation: their employment rates were at record high levels and yet income inequality was on the rise. Typically, rising employment might be expected to reduce income inequality as the number of people earning no salary or relying on unemployment benefit falls. However in recent decades the potential for this to happen has been undercut by the gradual decline of the traditional, permanent, nine-to-five job in favour of non-standard work, typically part-time and temporary work and self-employment. More (often low skilled) people have been given access to the labour market, but at the same time this has been associated with increased inequalities in wages, and unfortunately, even in household incomes.”

The economy is now in ‘recovery’, but this trend which started before the crash has not abated. We are seeing ‘record high’ employment rates again, but no rise in incomes, while we see big rises in temporary or “zero-hours” jobs, and a big increases in self employment, much of which is very low paid, with those newly self-employed reliant upon working tax credits to get by.

When asked about this, Government Ministers will often argue that “any job is better than no job at all”, or that a low paid or zero-hours job will for many be a stepping stone to something better. For some this may be true, but the OECD qualifies this heavily though, saying:

“While associated with lower job quality, non-standard work can be a “stepping stone” to more stable employment – but it depends on the type of work and the characteristics of workers and labour market institutions. In particular, temporary work can increase the chances of acquiring a standard job compared with remaining unemployed in the short run by some 12 percentage points on average. But this is not true of part-time work or self employment, which do not increase the chances of a transition to a standard job… In addition, transition rates remain low when considering a longer time span: less than 50% of the workers that were on temporary contracts in a given year were employed on full-time, permanent contracts three years later.”

As much as the Government trumpets the UK’s high employment rate then, it’s to be hoped that it keeps an eye on job quality as well as quantity. Those taking on part-time, temporary or self-employed roles as there is nothing more permanent available can easily get stuck in that type of work rather than it being a ‘stepping stone’ to something better. Ministers should be concerned with this rather than being complacent, because it is a problem that could have long term impacts and effect everyone, not just those stuck in ‘non-traditional work’.

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