A reverse recovery?

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The UK has become skilled at creating low-paid jobs, says Vidhya Alakeson


Jobs growth remains strong, a sign that the economy is picking up. But pay is still far behind where economists expected it to be. In January, they were hailing this as the year of the pay rise, but with fewer than fourth months to go it seems there is now no way that, on average, real wages can be higher this year than they were in 2013. In fact, pay including bonuses actually fell this month, while pay excluding bonuses rose anaemically and far below inflation.

This will not be much of a shock to low-paid workers. I spent a day last week interviewing retail workers and their managers about pay and opportunities. From their perspective, there is no sign of a recovery - quite the reverse. Full-time contracts are increasingly being broken up into part-time contracts that offer employers more flexibility in how they deploy their staff. The job that ten people used to do is now being done by five and layers of management have been removed. In this light, it is unsurprising that the latest Government figures show zero-hours contracts going up and persistently high levels of involuntary part-time and temporary employment.

It would appear that what employers were forced to do during the downturn just to get by - cutting back on hours, making contracts less secure - they are now doing as a matter of course. In low-skilled sectors like retail and hospitality, it is employers who call the shots.

What does all this mean for childcare? First, much of what is true about retail and hospitality is also true of childcare as a sector. The tiny pay rise you get in much of retail if you move from the shop floor to a supervisor position - 50 pence an hour - is not dissimilar to the situation in childcare I wrote about last week, where greater responsibility doesn't lead to much more pay.

Second, it means that things will continue to be tough for childcare providers in less affluent areas. The lack of demand that was a feature of the downturn looks likely to drag on. At the bottom end of the labour market, it seems we have become too good at creating low-paid, poor-quality jobs.

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