16 November 2016

Only one in ten people on low pay escaped on to higher earnings between 2001 and 2011, the government's Social Mobility Commission has reported, warning of a looming skills crisis if current trends continue.

In its latest State of the Nation report, published today, the Commission warned that incomes are dropping and intermediate-level jobs are disappearing, trapping an increasing number of people on low pay with slim chances of progression.

Real wages have fallen by five per cent on average since 2008, with younger workers especially hard hit by a 15 per cent drop in hourly pay. Meanwhile, 700,000 higher-paying jobs suited to those with intermediate-level skills have dropped out of the economy.

As a result, the Commission anticipated a surplus of five million low-skilled workers who will struggle to find work by 2022; as well as a deficit of three million high-skilled workers, which will leave employers unable to fill higher-paid vacancies.

Low-paid and low-skilled workers need to be helped to increase their social mobility, the Commission argued, highlighting that children whose families earn low incomes are still being left behind – only four per cent of doctors, for instance, originate from a working class background.

"We have a higher proportion of people in low-paid employment than other comparable nations and, overall, a higher incidence of low skills," the report stated, noting that most low-paid workers are women, partly due to childcare responsibilities and partly due to the lack of career progression available in traditionally female-centric occupations.

"The time has come to break the vicious cycle of low skills leading to low pay in low-quality jobs through a more active labour market policy on the part of both government and employers," the Commission added.

"There are too few progression opportunities for workers in the bottom half of the labour market … We recommend that all large employers develop strategies to provide their low-skilled workforces with opportunities for career progression."

Among the Commission's proposals was a fund to help people retrain later in life, a ban on unpaid internships, and a "new concordant" between government and businesses laying out employers' social obligations.

The Institute of Employment Rights agrees that the UK's increasing reliance on low-skilled and low-paid workers is raising levels of inequality and slowing the nation's economy.

In our Manifesto for Labour Law, 25 recommendations now adopted by the Labour Party, we argue that workers' representatives should have a seat at all levels of the economy. This includes collective bargaining at both enterprise and sectoral levels, as well as a reinstated Ministry of Labour, the Secretary for which should be in the Cabinet.

Through a more equal partnership between government, employers and workers, pay will increase and businesses will be incentivised to shift their focus towards upskilling their workforce and investing in research and development in order to compete, rather than racing to undercut each other on wages.

Read the full State of the Nation 2016 report here

Read more on our Manifesto for Labour Law