Getting worked up
This is part 1 of a three-part series on the challenges and opportunities for WorkerTech in the UK.
What do you think about technology and work? Is it making it possible to work faster, better, more flexibly and remotely? Is it fragmenting work into isolating gigs where there’s no real control? Or are the robots about to start taking all the jobs?
In this series of posts, I want to summarise where I think technology and data can play a positive role in improving work for those in lower-paid and precarious work, a group that’s often left out of Future of Work discussions.
Digital technology is powerful: it can connect us to other people thousands of miles away with which we share a connection. It can parse the world’s information and serve up results just for us. It can map the route between any two points on earth. Digital technology has a role to play, alongside better regulation and governance, in improving all types of work.
This might seem an overly optimistic take when technology is being used in many situations to make work harder, less rewarding, more precarious. A crucial debate is underway about how to regulate technology at work to mitigate these harms, with important work from the Future of Work APPG and from unions, among others.
But the potential benefits of technology are underused for many types of low-paid work, and there is much less debate about ways to use technology to create positive change. This is something that the Resolution Trust and Resolution Foundation have been considering for the past few years.
In this blog series, we aim to set out some of the gaps and opportunities where we can see the potential for better solutions and ideas. These are the ventures and ideas that we are seeking to fund through the WorkerTech Partnership, a social investment programme to improve the world of low-paid work delivered in partnership with Bethnal Green Ventures.
Let’s start with the basics: who is low paid in the UK today?
We define low pay as being below two-thirds of the median hourly pay — that meant earning less than £9.12 per hour in 2020 (that compares to the current Real Living Wage rates of £11.05 in London and £9.90 in the rest of the UK). You can also look at weekly low pay levels — which do a better job of incorporating those on low hours — in which case weekly low pay means earnings below £320 a week.
Workers who receive low hourly pay are disproportionately female, young, working part-time, and are found in hospitality and retail sectors.
Over two-thirds (69 per cent) of 16–20 year olds and 28 per cent of 21–24 year olds were low paid in 2019. 35 per cent of low-paid people in 2019 were 16–24 years old. 58 per cent of low-paid people worked part-time in 2019 (based on hourly low pay).
Hotel and restaurant workers represent 20 per cent of low-paid workers. Wholesale and retail — another 26 percent. 58 per cent of care workers were paid less than the real living wage from 2017–2019.
What are the problems with low-paid work in the UK?
Low-paid work is more common in the UK than in many other European countries. And the problems of low-paid work go beyond the hourly wage. Jobs that are low-paid are also more likely to have precarious hours, lack employment rights such as access to sick pay, and lack opportunities for training.
These important structural problems need addressing through regulation, better governance and enforcement. But there is also a role technology can play in improving individual choices within the system, as well as demonstrating ways that work can be done differently to employers and government.
The Resolution Foundation has published a great deal on low pay and the issues it creates. Many of these are complex problems, and require a range of interventions to address them. When it comes to WorkerTech and ventures, there are five issues to highlight:
1. Precarious hours lead to unpredictable income
Low paid work is often work that is paid by the hour, and done in shifts. Firms are often keen on flexible contracts, or using independent workers, to adjust staff to demand. But having a different wage every week, and uneven income creates knock-on effects on benefit income, and can make it hard to budget and plan spending. When the hours worked aren’t guaranteed by your employment contract, or the timing of those hours is really unpredictable, it can also create problems with things like transport to work and childcare.
Over 80 per cent of lower earners (those with annual take-home pay of around £10,000 a year) with a steady job have volatile pay, compared to two-thirds of those on higher earnings (with take-home pay of around £35,000 a year).[1] It’s really common for those on shifts to have short notice of their hours. The Living Wage Foundation found 80% of shift workers get less than four weeks’ notice. Zero-hours or low-hours contracts are more common in low-paid roles.
Ways to smooth out income, manage finances and fill earning gaps and support moving to better jobs can all help here.
2. Lack of control and agency at work contributes to anxiety and stress
As well as the downsides of unpredictable income on your bank balance, there are also other challenges that come with it. 36 per cent of workers in the lowest-paid quintile feel anxious about ‘unexpected changes to their hours of work’, versus 14 per cent in the highest pay quintile.
And although lower paid workers used to have the highest job satisfaction, at over 70 per cent in the early 1990s, it has now fallen to 56 per cent, despite the National Minimum Wage rises in this period raising relative earnings.[2]
The proportion of those who report they are often stressed in skilled manual roles (such as driving or care work) has doubled over the same 26-year period, from 18 per cent to 41 per cent. Employees in the hospitality, retail, and transport & storage sectors were most likely to report lacking control in both what tasks to do, and how to do tasks in 2017.
It’s clear that not just pay and hours, but agency and control matter to people’s experiences of good work. Connection and communities that address wellbeing and work conditions can make an impact here.
3. Workers often have to make choices without good information
The world of work is full of choices — which courses to take, where to look for work, which jobs to apply for. Some types of work involve even more options: whether to use an ‘umbrella’ company for PAYE or be a self-employed contractor; which expenses can be claimed against tax; which jobs and hours to take on.
These choices are frequently constrained by money, time, travel options and childcare. But they can also be limited by a lack of good information.
Even when the information is somewhat available, as with wages, there is some evidence that people tend to assume that their current wage represents more or less the market rate, and that those who are underpaid are overly pessimistic about wages available elsewhere, making them less likely to move.[3]
Where workers are recruited by an agency, they may be asked to choose a payroll provider or umbrella company to act as their employer and provide PAYE. The information needed to make a choice about the different payment options is often hard to understand or incomplete, and can leave workers worse off in income or rights. [LITRG Labour Market Intermediaries] Agency workers frequently report being uncertain of their employment status, their statutory rights, and the implications of self-employment versus employment via an umbrella company.[4]
For many workplaces, the true working conditions are somewhat hidden, so it can be hard to make good comparisons. Better information, data aggregation, search and customisation can all be useful tools for these issues.
4. A rising share of jobs lack opportunities to connect with co-workers
Opportunities to form connections and find support from co-workers and others in the same sort of job are reducing in many areas. Where many workplaces used to include a staffroom or breakroom where you could chat to colleague while on your tea break, these are now few and far between. Some jobs have always had these traits — long-distance lorry drivers, for example — but other jobs are making it more and more difficult to spend time with others, as shifts are moved around, staff are reduced and work is more often remote.
Although Union membership has increased slightly in the last few years, those increases have been mainly in the public sector, and among higher-paid professions. Union membership is around 1 in 7 employees in the private sector, with wholesale and retail membership around 12 per cent, and hospitality only 3 per cent.
Changes in management and automation of roles are removing opportunities for workers to connect with each other. 26% of retail workers in an USDAW survey reported that communication with colleagues has worsened in the last 5 years. All of this means that opportunities to exchange information, share problems and experiences, and to organise for collective action have been reduced. Way to recreate connection and form new ones, mediated by technology could start to repair these problems.
5. Low-paid workers are less likely to receive training
In the changing and shifting UK economy, currently handling technological change, and the shockwaves of Covid-19 and Brexit, being able to undertake training to reskill, upskill or just keep pace with business changes is essential. But workplace training overall has been in long-term decline. And low-paid workers are even less likely to be offered training, either on-the-job or offsite. For those who are not employees, but classified as ‘workers’ or self-employed, they are even less likely to receive training, as that would be taken as a strong signal that the company providing them with training considering them a de-facto employee.
Ways to engage in learning, identify opportunities for progression or just access better information can all fill some gaps here.
In the next part of the series, we will look at what the opportunities are for WorkerTech to address these issues.
For investments at the very early stages (pre-product, pre-revenue), check out BGV’s 12-week Tech for Good programme (applications are open until 9th Jan 2022). For investments at the later stages, head over to Resolution Ventures’ website for more details.
This series is brought to you by Bethnal Green Ventures in partnership with Resolution Ventures, the venture arm of Resolution Foundation, a think-tank focused on improving the living standards of those on low-to-middle incomes.
[1] D Tomlinson, Resolution Foundation, Irregular Payments: Assessing the breadth and depth of month to month earnings volatility, October 2018
[2] Work Experiences, Resolution Foundation, October 2021
[3] Jäger, Roth, et al. Worker Beliefs About rents and Outside Options, July 2021 https://ninaroussille.github.io/files/JRRS_Beliefs_Rents_Outside_Options_July2021.pdf
[4] See, for example, Secret Agents
