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Employer Perspectives on the Recruitment, Retention and Advancement of Low-pay, Low-status Employees

Atkinson J, Williams M
Strategy Unit Occasional Paper Series 2, Cabinet Office, July 2003

a paper prepared for the Cabinet Office Strategy Unit

Low skill, low status jobs in the UK can constitute a first step on a ladder to rising lifetime earnings, in which experience, tacit skills, contacts and know-how can be acquired and used to promote a pay off later. However, in practice, they provide little or no basis for substantial advancement through the labour market: the evidence suggests that short-term mobility in the wage distribution is limited, and that individuals who do progress do not generally progress very far.

Recruitment and Selection Issues

The cheap and unprofessional recruitment and selection methods which often accompany entry to such low skill, low status jobs means that subsequent wastage is unnecessarily high, as round pins fall out of square holes. Furthermore, some employers do not regard such wastage as a bad thing if it does indeed shake out unsuitable employees.

Such evidence as there is suggests that certain personal traits (especially reliability, motivation, health/fitness, honesty, integrity, ‘good attitude’ and keenness) are valued most highly among the selection criteria used to by employers to recruit employees. In addition, in these low-level jobs, basic skills are far more widely and positively ranked than are specific technical or vocational skills. Finally, evidence of suitability and competence, derived in this case from an employer reference and/or previous relevant job experience, is also quite highly sought after.

Skill Acquisition

The concentration of people without qualifications in such jobs, and the lack of training derived from them, further constrains movement. Consequently, people who enter low skill jobs without significant qualifications are unlikely to gain them during, or more particularly as a result of, their occupancy.

Moving to a Better Job

For this reason, opportunities for advancement are largely restricted to:

• promotion opportunities with the existing employer, that do not call for better formal qualifications, and are not the prerogative of better qualified external entrants. UK employers report that such openings are often simply not recognised by many new entrants to their sectors, who conclude that prospects are poor and so quit to look elsewhere.
• similar jobs with ‘better’ employers elsewhere in the local labour market. Opportunities for such slightly-better-than-horizontal moves between employers are often substantial, and this kind of movement is rife among labour intensive service sector businesses in today’s buoyant labour markets.

Labour Turnover

International comparisons of labour turnover place the UK mid-way between a fluid North American pattern of labour churning, and a lower Continental European one. Recent UK evidence indicates that a typical new job lasts just 15 months, although the average length of a job in progress is over five years, as most workers eventually find a long-term job match. Seventeen per cent of new jobs end within three months, and 42 per cent within one year.

Although UK employers have an underlying interest in reducing high turnover in low skilled jobs, this is rarely viewed as either a high priority or readily-attainable goal, and there is scant evidence of them acting on their own initiative or in a consistent way to contain or reduce it, even in very tight labour markets.

Barriers to Stability and Advancement

The evidence suggests that the vast majority of former welfare recipients going into low status jobs often face strong and multiple barriers to both gaining, retaining, and advancing in employment. UK employers report that recruits who have no (or no recent) experience of work often face a quite profound shock and that some have difficulty both in recognising, and then in complying with, the norms of working life. Attendance, timekeeping, and motivation are key problem areas.

US evidence broadly confirms this view, with participants in employment programmes recognisably facing multiple challenges to finding and keeping jobs. The most frequently reported challenges were two outside work problems: childcare and transportation, followed by lack of education, family and parenting problems, life and job readiness skills, behavioural problems and lack of motivation and low self-esteem. Lack of job readiness seems to be the principal bête noire of UK employers recruiting from disadvantaged groups who have had little or no recent experience of the workplace and its demands.

Employers and Public Intervention

There is mixed evidence on the extent to which US employers are willing to provide low skill, low status recruits with practical help to overcome these problems. In the UK, it would seem that employers are ready to act more flexibly and constructively when they face tight labour markets. They seem more willing to engage in substantive innovation (for example, over transport or childcare) where the costs of such change do not fall significantly on them. They appear much less willing to modify the basic norms of behaviour (timekeeping, attendance, appearance, manner, etc.) as this is viewed as being incompatible with the effective delivery of their business or activity.

Case Management

Although it is generally agreed that case management through a personal support worker and adviser can have a significant impact on the employment status of a range of programme clients, there is a lack of clear evidence of the impact of advisers on retention and advancement. Often such advisers have neither the remit nor the time to offer such an extended service. Case management appears to work best when:

• supplemented with other tangible services to support retention
• tailored to individual circumstances
• mediation with employers is available, but moderated in the light of individuals’ wishes for confidentiality regarding their former welfare status
• case managers can respond quickly to requests from employers to provide mediation and any subsequent necessary assistance.

Financial Incentives

The evidence suggests that using financial incentives with employers to promote retention of low skill, low status employees, and former welfare recipients in particular, may be viable. Overall, it appears that employers are open to financial incentive and wage subsidy schemes. Unless the calibre/suitability of the individual is sufficiently assured, however, this can lead to problems for the employer and discourage them from utilising such schemes. Some potential solutions include better job matching and job brokering by employment services, pre-employment training, and realistic job previews or work trials. Substitution and deadweight effects are important considerations in considering the efficiency of wage subsidy schemes.

In addition to financial incentives for employers, financial incentives to individuals may increase their motivation to remain in employment.

Longer Term Career Advancement

US evidence suggests that certain key factors are associated with longer term wages growth and career progression:

• Working steadily at any job initially, even over several years, does not lead to substantially higher wages later on.
• Switching jobs periodically, and voluntarily, can be a path to higher wages later on.
• Frequent changes of jobs of more than one a year, however, are associated with lower wages as are involuntary job changes.
• Starting out in higher paying jobs is linked to higher wage growth over time.
• Starting out in certain occupations is linked to higher wages later on. One study found highest earnings growth in clerical occupations, followed by production and manufacturing occupations, followed by health care and childcare jobs, with lowest earnings growth being in sales occupations.
• Higher basic skills, especially education beyond high school, are strongly linked to higher wages later on.

This evidence confirms that the most common policy response to promoting career advancement has been to add case management and supportive services to existing pre-employment services such as job search. However, it is also argued that this is not enough to promote career advancement, which also requires:

• Connecting people directly to better jobs. This requires (1) training welfare staff in careers development so they can tailor individual paths to obtaining better jobs, (2) developing assessment tools to help welfare staff match skills needed in particular jobs with the skills of low income people; (3) maintaining close and continuous links with local employers, and (4) creating mechanisms for identifying up-front potential challenges to employment.
• Upgrading skills while unemployed by making skills training available and accessible to the unemployed before finding jobs for them, so that the initial job entered offers more prospects than would otherwise be the case.
• Upgrading skills while working by forming partnerships with employers to provide training, either on-the-job or close to the work site, that is closely connected to employers’ needs.

Employer Perspectives on the Recruitment, Retention and Advancement of Low-pay, Low-status Employees, Atkinson J, Williams M. Strategy Unit Occasional Paper Series 2, Cabinet Office, 2003.
ISBN: 978-0-71150-449-3. Bound copy: £free

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