Introduction

Public policy concern over the situation of the low-paid worker has grown as earnings inequality in Britain has risen to unprecedented high levels, and this has been reflected in the introduction of a national minimum wage in April 1999, which was set initially at £3.60 per hour for adults, but subsequently raised to £4.10 per hour in October 2001 and £4.20 per hour in October 2002. At the European level, too, there has been much interest in low pay issues, following the Lisbon summit of March 2000, with the European Union (EU) survey, Employment in Europe 2001, suggesting that:

There is some evidence of the existence of a two-tier labour market where the first tier is made up of jobs subject to decent pay, relative job security and career prospects, involving generally good working conditions. The second tier comprises not only unemployment and discouraged workers, but also those employed in jobs of low quality, which have low pay, precarious employment relationships or lack of further education and career development prospects. (p 79)

Following on from this, four categories of jobs are distinguished:

• • dead-end jobs which are short term, lacking in training and offering low pay (defined in the report as less than 75% of the countryspecific median hourly wage);

• • low-pay/low-productivity jobs with the same features as dead-end jobs but also with training and career prospects;

• • jobs of reasonable quality, which offer decent pay and either relative job security or employer-provided training and career prospects;

• • jobs of good quality, which have all the desirable characteristics listed earlier.

Implicitly in our analysis, we group together the first two categories as low paid and the last two as higher paid.

The report recognises that both objective and subjective criteria are involved in evaluating job quality, but seems to regard job satisfaction as a reasonable proxy, noting that 65% of workers report high levels of job satisfaction in jobs of good quality as opposed to only 30% in jobs of low intrinsic quality. This theme was continued in Employment in Europe 2002, which includes job satisfaction in its definition of quality of work and reports, on page 83, that in all member states self-reported job satisfaction is strongly positively correlated with wages, job status and job-related skills acquired through training.