It's Time To Tackle Britain's Endemic Low Pay Problem Or Social Mobility Will Pay The Price

Although it is in Britain's DNA that everyone should have a fair chance in life, ours is a country where still too often demography still defines destiny. Being born poor all too often condemns a child to a lifetime of poverty. Disadvantage - and advantage - cascade down the generations. Over the decades, we have be-come a wealthier society but we have struggled to become a fairer one.
Open Image Modal
Clerkenwell via Getty Images
Open Image Modal

Although it is in Britain's DNA that everyone should have a fair chance in life, ours is a country where still too often demography still defines destiny. Being born poor all too often condemns a child to a lifetime of poverty. Disadvantage - and advantage - cascade down the generations. Over the decades, we have be-come a wealthier society but we have struggled to become a fairer one.

Today, a new report by the Social Mobility Commission, shines a light on the low pay challenges faced by people who are not in extreme poverty - important a cohort though they are - but are usually in work. It paints a graphic picture of thwarted ambition and unfulfilled potential for these treadmill families who are running harder and harder but simply standing still. They are the victims of Britain's endemic low pay trap.

It finds that just one in six people who were on low pay in 2006 had escaped it by 2016. On average these workers saw pay rise of just 40 pence an hour in real terms over a decade. It should come as no surprise that the overwhelming majority are women, often young, mainly working part-time and trying to juggle work with child-caring responsibilities.

I believe we have reached an inflection point. Britain's flexible workforce gives us global economic advantage but a two-tier labour market is now exacting too high a social price. The British economy is performing very well in terms of employment with a record 75% of the working-age population in work. But it is doing less well in terms of the quality of those jobs. With one in five people on low pay, we have a higher proportion of people in low-paid employment than other comparable nations.

In our lifetimes something profound has happened in the labour market. The global financial crisis was a watershed moment. In its wake, stagnating incomes and earnings have become the norm for a large proportion of adults in our country.

But the truth is that deep-seated structural changes in the labour market over many years has already created the conditions for a widening in-equality in the nation. Since the 1970s, people with high skills and qualifications enjoy greater job security, higher levels of prosperity and better prospects of social advance. Those without, find it hard to escape a world of constant insecurity, endemic low pay and little prospect of social progress.

Already traditional intermediate areas of better-paid employment that could have served as a gateway to progressing from low-skilled work are being hollowed out. Within decades, he Bank of England has suggested that up to 15 million current jobs are at risk of automation. Public policy needs to change tack to mitigate the risks and accentuate the opportunities. The approaches of the recent past will not do for the future. Three big changes - both in strategic thinking and in real-world execution - are needed.

First, a change in approach to welfare policy. Today, more people are in poverty in work, than those out of work. Of course, getting people off welfare into work must continue, but there should be a new and equal priority given to moving people from low pay to living pay. The Chancellor can make a start on this process in his Budget by ending the profound unfairness of reducing State support for people in work while maintaining support for those who are retired.

Secondly, the Government should change its approach to the labour market. Simply increasing pay cannot be done without improvements in productivity and progression opportunities. That will require a much more active labour market approach and a closer partnership between government and employers to create better internal pathways to promotion.

The third change is in education and employability policy. Britain's low pay problem is largely a low skills problem. The vocational route - which is the destination for most low income youngsters - has not evolved to match national skills demand. Too many courses simply lead to low-paid work in low skilled sectors of the economy. Apprenticeship numbers are growing but the focus has been on quantity not quality. Poorly qualified adults also need far better opportunities to improve their career prospects and realise their ambitions.

The advent of different types of jobs - often requiring higher levels of skill - holds out the potential of a social mobility dividend for the nation. If the low pay trap is to be sprung and the potential of millions of workers is to be un-leashed then policy-makers will need to summon up the courage to change. The goal of a more socially inclusive and mobile nation calls for fundamental reforms to Britain's education and skills system and in our labour markets. The good news is that there is a palpable hunger for change in the country. Government should seize the moment and make it happen.

HuffPost UK has teamed up with television presenter, broadcaster and author June Sarpong, ahead of the launch of her book Diversify: Six degrees of integration, to highlight and champion the economic, social and moral benefits of diversity.

Throughout this week we will be hosting personal stories and opinions from June, as well as the inspirational and influential people who helped inform the book and project. To find out more visit Diversify.org.