Press Story

Understanding in-work progression in Europe is vital to finding a solution to low pay, in-work poverty and the lack of candidates available for highly-skill vacancies, according to a new report from IPPR published today. The report surprisingly concludes that Belgium, rather than Nordic countries, which have a commitment to stable, secure employment and skills development, leads the pack in terms of job progression across Europe.

The report is the latest from a programme of work supported by the global JPMorgan Chase New Skills at Work initiative. The European component of the programme was announced last April confirming IPPR as lead research partner.

The report looks at how rates of in-work progression have varied across Europe in recent years looking at four measures of labour market progression: occupational progression, employment earnings, hours and contracts.

The report shows that there has been a hollowing out of middle-skilled jobs with most European countries seeing an increase in the number of low-skilled, low paid jobs as well as in the number of highly-skilled workers, which may have closed routes that those in low-skilled work were previously able to advance through. Between 2000 and 2010 the number of low-skilled jobs rose by over 10 per cent, and highly-skilled by over 15 per cent, while the number of mid-skilled roles shrunk.

The report warns that demand for highly-skilled labour is outpacing supply, while at the same time, the number of jobs in the middle of the occupational distribution is shrinking and expected to continue doing so. This is likely to affect career pathways and, left unchecked, may exacerbate existing skills shortages.

The report highlights a number of ways that employers can adapt in order to fill highly-skilled vacancies

engagement with the education and training system in order to equip labour market entrants with those skills in demand
greater provision of in-work training to their current workforce
designing career pathways so that individuals can progress within and across employers from a wider variety of starting occupations
creation (by governments) of labour market institutions to support progression.

The report also shows that countries such as Sweden and Norway, which have a commitment to stable, secure employment and skills development, do not necessarily have higher rate of progression. It further shows that countries such The Netherlands and the UK, which has more insecure employment but flexible labour markets perform towards the middle of the pack on progression.

The report highlights that Belgium is a key country to look to for lessons, as over 1 in 5 workers attain a higher skilled occupation over a four-year period. Belgium's high rates of progression are supported by an even spread of jobs across skill levels including a greater share of employee jobs in the middle of the income distribution. It has over 40 per of its jobs in mid-skilled occupations, while in the UK the equivalent figure is around 25 per cent.

The report shows that sectors are also key in the types of jobs that are available. Belgium, for example, has a large manufacturing sector, which tends employ more mid-skilled workers, as does its business services, retail and hospitality sectors. The report further shows that in many of the countries with high rates of occupational progression such as Belgium, employees report favourable promotion prospects and individuals are more likely to progress while staying with their current employers. This suggests that human resource practices such as the design of career pathways may also be important factors determining occupational progression rates

Spencer Thompson, IPPR Senior Economist Analyst, said:

"Progression is an important way of meeting the demand for highly-skilled labour, by up-skilling the existing workforce so that they can be better matched to available vacancies. While for those in low-skilled, low-paid work, progression offers a way to escape working poverty and gain greater economic security.

"Understanding in-work progression in Europe is vital in improving employee prospects for promotion and advancement offers a route out of in-work poverty for those workers stuck on low pay. Meeting Europe's skills needs will require mobilising the existing workforce through in-work training and lifelong learning as well as improving the skills of entry-level workers.

"We can see this happening now - while university graduation rates have increased, demand for graduate labour may have outpaced supply. This has led to rising earnings at the top, which has made already high levels of pay inequality worse. And this will have an impact beyond pay, as a lack of sufficient high-level skills supply in Europe may cause many employers to look to other global regions in order to fill these roles."

The report identifies three reasons why employers and policymakers should be concerned about current patterns of progression:

Supporting skills supply.
Providing a route out of low-skilled, low-paid work.
Reducing labour market insecurity.

Notes to Editors

IPPR's new report – Employee progression in European labour markets- will be available from Friday 6th February from: http://www.ippr.org/publications/employee-progression-in-european-labour-markets

Progression is generally taken to mean improvements in the labour market position of individual workers. While this can include movements from unemployment or economic inactivity into work, this paper focuses on the transitions of those who are already in employment.

To provide an assessment of how rates of progression vary across European countries this paper uses the European Union Survey of Incomes and Living Conditions dataset (EU-SILC), covering the years 2004 to 2011.

While the trend towards low pay, weak wage growth and economic insecurity has worsened considerably since the start of the recession, it is important to note the situation of workers at the bottom of the labour market had deteriorated long before Europe's current economic crisis.

The JPMorgan Chase New Skills at Work programme in Europe is a three-year, $30 million initiative which aims to identify strategies and support solutions that help improve labour market infrastructure and develop the skilled workforce globally. The initiative brings together leading policymakers, academics, business leaders, educators, training providers and nonprofits with the goal of connecting labour market policy with practice, supply with demand and employers with the workforce – all to strengthen the global economy. The overall programme is a five-year $250-million initiative, the largest-ever private-sector effort aimed at addressing the "skills gap" that exists across many industries globally.

Contacts

Sofie Jenkinson, 07981 023 031, s.jenkinson@ippr.org

Danny Wright 07887 422789, d.wright@ippr.org