Review of the Low-paying Sectors

1 Since the 2005 Report, we have conducted an internal review of the composition of the low-paying sectors. In order to identify low-paid workers more accurately, we concluded that we should revise the industry-based definitions used in previous reports and introduce a new definition of low-paying sectors based on low-paying occupations. The new definitions of low-paying sectors, as set out in this appendix, are used in this report.

2 As the Annual Survey of Hours and Earnings (ASHE) data are regarded by the Office for National Statistics (ONS) as the best data source available for information on earnings by industry and occupation, the review used ASHE to identify industries and occupations that had an above average number of employees paid below certain pay thresholds. The Standard Industrial Classification (SIC 2003) and the Standard Occupational Classification (SOC 2000) were used as the building blocks to aggregate these low-paying industries and occupations into recognisable sector groups.

3 The Labour Force Survey (LFS) and the ONS employee jobs series were then used to check whether the employment data for the low-paying occupations and industries identified were of sufficient quality to enable reliable analysis.

Defining the Low-paying Sectors

4 Our analysis of the low-paying sectors and occupations in Chapter 3 is based on ten industrial sectors and two occupations ­ childcare and office work. Our review showed that the definitions of low-paying sectors we had been using prior to this report remained largely appropriate but it also identified a few areas where we could improve our coverage of low-paid workers. We outline below the composition of each of these sectors and occupations and the changes we have instigated.

New Industry-based Low-paying Sectors

5 We have retained, in large part, the definitions of low-paying sectors used in previous reports with a few amendments. We have made small changes to the definition of the textiles and clothing sector and expanded the definition of the retail, social care and cleaning sectors. We have added two new sectors ­ food processing (which includes the manufacture of food products; food processing and food preparation) and leisure, travel and sport. Details of the revised definitions are as follows:

• Retail: We have added 'Sale, maintenance and repair of motor vehicles and motorcycles' (SIC2003 = 50), which includes the 'Retail sale of automotive fuel', to the previously defined retail sector (SIC2003 = 52). Our definition of the retail sector now covers all retail and repair industries but excludes wholesale activities. The 'Renting of video tapes and DVDs' industry (SIC2003 = 71.405) has also been added where the data can separately identify this category. Retail therefore now consists of the SIC2003 codes 50, 52 and 71.405.
• Hospitality: The sector that covers hotels, bars and restaurants has remained unchanged. Hospitality consists of the SIC2003 code 55.
• Social care: We have added 'Social work activities without accommodation' (SIC2003 = 85.32) to the social care sector, which previously consisted solely of 'Social work activities with accommodation' (SIC2003 = 85.31). This change has partly been driven by changes to the ONS employee jobs series, which merged these two categories in June 2005. We have also added the 'Medical, nursing home activities' sector (SIC2003 = 85.113) to our categorisation of social care. Social care now consists of SIC2003 codes 85.3 and 85.113.
• Textiles and clothing: We have removed 'Manufacture of footwear' (SIC2003 = 19.3) from our original definition of the textiles, clothing and footwear sector. The footwear sector employs very few workers and is no longer regarded as low-paying: only 7 per cent of employees earned less than £5.35 an hour in April 2005. This sector has been renamed as the 'Manufacture of textiles and clothing' and consists of SIC2003 codes 17 and 18.
• Cleaning: We have added 'Washing and dry cleaning of textile and fur products' (SIC2003 = 93.01) to 'Industrial cleaning' (SIC2003 = 74.7) in this sector. As a result, the cleaning sector now includes SIC2003 codes 74.7 and 93.01.
• Hairdressing: This sector, which includes hairdressing, beauty treatments and physical well-being activities, has not been revised and will continue to be defined by SIC2003 codes 93.02 and 93.04.
• Security: This sector has not been revised and will continue to be defined by SIC2003 code 74.6.
• Agriculture: This sector, which includes agriculture, hunting, fishing and forestry, has not been revised and will continue to be defined by SIC2003 codes 01­05.
• Leisure, travel and sport: This is a new low-paying sector, which includes sporting activities, cinemas and other entertainment and recreational activities. The leisure, travel and sport sector consists of SIC2003 codes 92.13, 92.3, 92.6 and 92.7.
• Food processing: We have also introduced food processing as a new sector. It includes the production, processing and preserving of meat, fish, fruit and vegetables, oils and fats, dairy products, grain, animal feeds and other food products (SIC2003 = 15.1 to 15.8). There is some ambiguity in the demarcation of food activities considered as retail (e.g. some bakers, fishmongers, pastry shops and butchers) and those regarded as manufacturing and processing. Where the processing is minimal and does not lead to a real transformation, the unit is classified to the wholesale or retail trade. Food processing thus consists of the SIC2003 codes 15.1 to 15.8.

6 Unlike the sectors listed above, childcare cannot be assigned to a corresponding industry-based sector. It cuts across the health, social work and education industries. Nurseries are assigned to the 'Primary education' sector. Child day-care activities are assigned to 'Social work activities without accommodation'. Orphanages, children's hostels and residential nurseries are assigned to 'Social work activities with accommodation'. Because childcare cannot be disaggregated from these broader sectors, we use an occupation-based definition as described below.

7 Similarly, office work cuts across several industries, including banking, finance, business services and public administration, and cannot be assigned to an industry-based sector, therefore we use an occupation-based definition as described below.

8 The coverage of low-paid employees using these new industry definitions is nearly 70 per cent (compared with around 55 per cent using the old definition). Table A5.1 presents the new classifications in tabular form.

New Occupation-based Low-paying Sectors

9 Previously we defined the low-paying sectors using industrial classifications, with the exception of the childcare sector, which was based on an occupational definition because an appropriate industrial classification was not available. In order to enhance our understanding of the situation of low-paid workers, we investigated the data on low-paying occupations. As a result of our investigations we have decided to supplement our definition of low-paying sectors by the use of definitions based on low-paying occupations. The sector headings relate closely to the industry-based sectors and relate mainly to the elementary occupations. Details of the categorisations are as follows:

• Retail: 'Retail assistants and cashiers' (SOC2000 = 711), 'Customer services' (SOC2000 = 721) and 'Elementary sales occupations' (SOC2000 = 925).
• Hospitality: 'Chefs, cooks' (SOC2000 = 5434), 'Hotels, porters' (SOC2000 = 9222), 'Kitchen and catering assistants' (SOC2000 = 9223), 'Waiters, waitresses' (SOC2000 = 9224) and 'Bar staff' (SOC2000 = 9225).
• Social care: 'Care assistants and home carers' (SOC2000 = 6115).
• Textiles and clothing: 'Tailors and dressmakers' (SOC2000 = 5414), 'Textiles, garments and related occupations' (SOC2000 = 5419), 'Textiles, process operatives' (SOC2000 = 8113), 'Clothing cutters' (SOC2000 = 8136) and 'Sewing machinists' (SOC2000 = 8137).
• Cleaning: 'Housekeeping' (SOC2000 = 6231), 'Industrial cleaning process occupations' (SOC2000 = 9132) and 'Elementary cleaning' (SOC2000 = 923).
• Hairdressing: 'Hairdressers and related' (SOC2000 = 622).
• Security: 'Security guards and related' (SOC2000 = 9241), 'Car park attendants' (SOC2000 = 9245) and 'Elementary security occupations' (SOC2000 = 9249).
• Agriculture: 'Elementary agricultural occupations' (SOC2000 = 911).
• Leisure, travel and sport: 'Sport and leisure assistants' (SOC2000 = 6211), 'Travel and tour guides' (SOC2000 = 6213), 'Leisure and theme park attendants' (SOC2000 = 9226) and 'Elementary personal services not elsewhere classified' (SOC2000 = 9229).
• Food processing: 'Butchers, meat cutters' (SOC2000 = 5431), 'Bakers, flour confectioners' (SOC2000 = 5432), 'Fishmongers, poultry dressers' (SOC2000 = 5433) and 'Food, drink and tobacco process operatives' (SOC2000 = 8111).
• Childcare: 'Nursery nurses' (SOC2000 = 6121), 'Childminders and related' (SOC2000 = 6122), 'Playgroup leaders and assistants' (SOC2000 = 6123), 'School crossing patrols' (SOC2000 = 9243) and 'School mid-day assistants' (SOC2000 = 9244).
• Office work: 'Telephonists' (SOC2000 = 4141), 'Receptionists' (SOC2000 = 4216) and 'Elementary office occupations not included elsewhere' (SOC2000 = 9219).

10 Table A5.1 summarises the above information. The coverage of the low-paid using these definitions of low-paying occupations is about 70 per cent.

Conclusion

11 In most low-paying sectors there is a good correlation between the industry-based and occupation-based definitions in terms of coverage, except for those sectors which have no corresponding industry or occupation classifications (office work and childcare) and for the cleaning sector (which is three times smaller in the industry classifications). Cleaning occupations are carried out across many industries. If these are performed in-house, the cleaning jobs will be assigned to the industry in which the cleaning has taken place. In contrast, hairdressing jobs are almost entirely carried out in the hairdressing industry.

12 Future employment and wage analyses will be presented using both definitions (industry and occupation). The ONS regards the LFS as the best available measure of employment by occupation and therefore this will be our source for the low-paying occupation-based sectors. We will, however, continue to use the ONS employee jobs series for our industry-based low-paying sectors as the ONS considers that this series provides the most accurate measure of employment by industrial sector.

Table A5.1

SIC and SOC Coding of the Low-paying Sectors Defined by Industry and Occupation

Note: n.a. = not applicable.