Diploma increasingly determines job and wage opportunities

Labour market is polarising towards lousy jobs and lovely jobs

Never before was the gap between higher income groups and lower income groups greater than today. This is the result of research conducted by Matthias Somers of the Minerva think tank. “The highest incomes have increased even further in recent years, while the lowest incomes have barely increased at all or have even decreased.”

In his study ‘Below the water line’, Somers investigated the correlation between diplomas, jobs and wages. He noted that the intermediate group is disappearing. “You used to be able to grow in your career with a secondary education diploma. 18-year-olds who started working at the bank counter could work their way up and build a great career with a nice wage. It was also possible to grow from an administrative job or from the position of shop assistant. But those opportunities have significantly decreased. Lower-skilled employees have completely disappeared from the highest wage groups. You’ll almost exclusively find people with Master’s degrees in the highest wage groups, with the occasional Bachelor’s degree or secondary education diploma. People without any type of diploma have completely disappeared from this highest wage group.”

Why is that?

Somers: “Jobs have obviously changed significantly. Administrative jobs are more complex than before and require higher education. Additionally, people are also studying longer. While many people used to start working after finishing secondary school, students are now more likely to continue studying. But that means that a larger group of people are confined to the lowest jobs in the labour market, without much prospect of career development. In 2000, people without a higher education diploma were still present in the higher wage groups. They had grown into or from administrative jobs or, for example, salespeople. But they have completely disappeared from that group in the 2018 figures. More than ever before, the labour market is divided in low-paying jobs for people with low qualifications and in high-paying jobs for the highly skilled.”

And does the intermediate group still exist?

Somers: “It’s decreasing in size. On the one hand, there is a growing number of elementary jobs. Think, for example, of cleaning and security personnel: these are people with low education levels performing jobs with low wages, little autonomy and arrangement opportunities. These are also called lousy jobs. On the other hand, the group of highly skilled knowledge workers is also increasing, who are experiencing all the great things about a job, such as a high wage and plenty of autonomy and arrangement opportunities. In between these extremes, you can find a decreasing number of administrative and technical jobs. In relative figures, this group is growing as well, due to the general growth of the labour market. But the share of this group is becoming ever smaller.”

Your study shows that these groups are becoming ever more homogeneous internally, but increasingly polarising among themselves. And this is reflected in their wages. How does that work?

Somers: “The employee profiles in each group are increasingly similar, but the difference between the groups is growing. We don’t know each other anymore. We don’t run into each other anymore, but are growing further apart, both in daily live and at work. This is partly due to outsourcing. Companies used to have their own cleaning service. If the company was doing well, the cleaning service also shared in the profit. Everyone’s wage increased. But that obviously doesn’t apply to an external cleaning service. They aren’t paid more because the client is making more profit.”

“Another factor is automation. Especially in the higher wage groups, it has increased productivity and thus created opportunities to raise wages. Highly skilled researchers, but also technical employees, have been able to boost their productivity and wage thanks to automation. But the cleaning work hasn’t changed. Or, at least, there were fewer productivity gains from automation in recent years. If these employees aren’t solidarily included in the company’s global profit growth, they will be left behind. We expect artificial intelligence to have an impact in this regard in the coming years as well. It will boost highly skilled employees’ productivity even more and result in higher wages.”

“Part-time work is another element to take into consideration. It’s much more common in employees in the lower wage groups. Think, for example, of shop assistants or people working in the healthcare sector. These employees work part-time much more often than employees in the higher wage groups. Their jobs are physically demanding, which makes them difficult to perform full-time and they have less arrangement opportunities, which makes them harder to combine with a private life in terms of flexibility. This results in an even larger gap between full-time lovely jobs and part-time lousy jobs.”

Yet the demand for low-skilled staff is also rising. There are quite a few jobs characterised by labour shortages for these people too. Why does this shortage not result in higher wages?

Somers: “Low-skilled employees are in high demand if they don’t ask for too much. And it’s difficult for them to ask more, because what alternative do they have? Saying no to a poorly paid job? Without a job, you end up in poverty and those who have to get by on benefits are pushed towards a job by any means necessary, even if it is a poorly paid one. Companies know they don’t have to offer more, because those who need a job, have no other option but to accept.”

Want to read more? The full research report can be found here.

Author: Jan Deceunynck | Image: Daniël Rys