Review of the Low-paying Sectors

1 We have referred to our low-paying sectors throughout this report, and in Chapter 3 in particular. These industries and occupations are defined as those containing a higher than average number or proportion of low-paid workers. Since our 2009 Report, the Office for National Statistics (ONS) has published the new 2007 Standard Industrial Classification (SIC 2007), which will apply to published data from summer 2010. We have conducted an internal review to assess how these changes affect our definitions of low-paying industries. We have also considered whether our low-paying industries and occupations are still the most appropriate sectors on which to focus our analysis.

2 This appendix documents the resulting changes to our low-paying sectors, which will be implemented in our 2011 Report. They are based on SIC 2007 and Standard Occupational Classification 2000 (SOC 2000). A detailed list of sectors is contained in Table A4.1. We have applied no changes to the definitions of our low-paying sectors in this report.

Defining the Low-paying Sectors

3 We would ideally use occupations to accurately define low-paid groups of workers and those most affected by the minimum wage. But data are not always available on this basis and stakeholder groups tend to be industry-based. We therefore have two sets of classifications, industries and occupations, which are as closely aligned as possible. We use the Annual Survey of Hours and Earnings (ASHE) to identify our sectors, as ONS considers this to be the best source of information on earnings by industry and occupation. The review was carried out prior to the publication of ASHE 2009 but the results have since been updated and they hold for the 2009 data.

4 As low-paid workers are found across a broad range of industries and occupations, our sectors do not capture them all. Our new low-paying industries accounted for around 72 per cent of workers paid no more than 10 per cent above the adult rate of the National Minimum Wage in April 2009 (£6.30), which is higher than the 69 per cent covered by our previous definitions based on SIC 2003. Around 73 per cent were captured by our new low-paying occupations. Because certain ONS datasets only contain data at two-digit SIC level, some of our future analysis may not be based on our full definitions of the low-paying industries. Our review has tried to avoid this, but we will document differences where necessary.

Low-paying Industries

5 Retail: There were minor changes to the definitions of retail industries within SIC 2007, but they did not affect the number of low-paid workers within our sector. We have kept wholesale and retail trade and repair of motor vehicles and motorcycles (SIC 2007: 45), retail trade, except of motor vehicles and motorcycles (SIC 2007: 47, which includes retail sale of automotive fuel in specialised stores), renting of video tapes and disks (SIC 2007: 77.22), and repair of personal and household goods (SIC 2007: 95.2).

6 Hospitality: The SIC 2007 changes did not affect our previous definition of hospitality to a significant degree, hence the most suitable categories are still accommodation (SIC 2007: 55) and food and beverage service activities (SIC 2007: 56).

7 Social care: The social care low-paying industry used to include some childcare activities as it was not possible to separate and identify them. This division has now taken place in SIC 2007. The resulting social care definition is residential care activities (SIC 2007: 87), social work activities without accommodation for the elderly and disabled (SIC 2007: 88.1), and medical nursing home activities (SIC 2007: 86.10/2). Other social work activities without accommodation (SIC 2007: 88.99) has been removed from the definition as it includes roles such as counselling and welfare support, which are not low-paid.

8 Employment agencies: The data show that temporary employment agency activities (SIC 2007: 78.2) and (other) activities of employment placement agencies (SIC 2007: 78.10/9) make up nearly 7 per cent of all jobs paid at the adult rate of the minimum wage. Therefore we have included employment agencies as a new low-paying industry.

9 Food processing: SIC 2007 caused very minimal changes to manufacture of food products (SIC 2007:10). The category remains a suitable definition.

10 Leisure, travel and sport: There were substantial changes to our leisure, travel and sport low-paying industry following the move to SIC 2007. After analysing the data, we have decided to amend the categories. They now consist of sports activities and amusement and recreation activities (SIC 2007: 93), motion picture projection activities (SIC 2007: 59.14), and gambling and betting activities (SIC 2007: 92). Creative, arts and entertainment activities (SIC: 90) has been removed as its coverage of low-paying jobs is minimal.

11 Cleaning: Changes to SIC 2007 have had a minor impact on our definition of the cleaning sector, however the changes marginally increased the number of low-paid workers covered. The categories are cleaning activities (SIC 2007: 81.2) and washing and (dry-)cleaning of textile and fur products (SIC 2007: 96.01).

12 Agriculture: There are fewer workers in the agriculture, forestry and fishing (SIC 2007: 01–03) industrial sectors following the SIC 2007 changes. We have decided not to add industries back into the definition and have focused the sector further by removing forestry and logging (SIC 2007: 02), which has few low-paid workers.

13 Security: There were no changes to the definitions of security industries within SIC 2007. Having analysed the number of low-paid jobs in each category we have removed security systems service activities (SIC 2007: 80.2) and investigation activities (SIC 2007: 80.3) to leave private security activities (SIC 2007: 80.1). This increases the proportion of low-paid jobs within the sector and aligns the sector more accurately with its equivalent low-paying occupation.

14 Childcare: As discussed, SIC 2007 has enabled us to identify the childcare sector as an industry for the first time. The categories used to define the sector are child day-care activities (SIC 2007: 88.91) and pre-primary education (SIC 2007: 85.1).

15 Textiles and clothing: There were no changes as SIC 2007 led to very minimal changes to manufacture of textiles and manufacture of wearing apparel (SIC 2007: 13–14).

16 Hairdressing: Changes to SIC 2007 have caused some very minor adjustments to the hairdressing and other beauty treatment (SIC 2007: 96.02) and physical well-being activities (SIC 2007: 96.04) categories. Fewer workers are covered by the definitions. Of those who have been removed (e.g. yoga and fitness instructors), only a minimal number are low-paid workers.

Low-paying Occupations

17 Our review has not led to changes to these low-paying occupations: hospitality; social care; food processing; cleaning; security; childcare; hairdressing; and office work. However, it has resulted in changes to the following.

18 Retail: We have added three occupations to the retail low-paying occupation, all of which contain a high proportion of low-paid workers: shopkeepers and wholesale/retail dealers (SOC 2000: 1234), floral arrangers, florists (SOC 2000: 5496), and merchandisers and window dressers (SOC 2000: 7125).

19 Leisure, travel and sport: All of the occupations within leisure, travel and sport remain appropriate as they contain a high proportion of low-paid workers. We have included the additional low-paid leisure and travel service occupations (SOC 2000: 6219).

20 Agriculture: We have aligned the agriculture low-paying occupation with its low-paying industry and not all of the original components were proved to be low-paid. We have, therefore, removed forestry workers (SOC 2000: 9112) and added agricultural and fishing trades (SOC 2000: 5119).

21 Textiles and clothing: We have removed clothing cutters (SOC 2000: 8136) because data showed that it was not a particularly low-paying occupation.

Table A4.1: New Definitions of Low-paying Industries and Occupations, by SIC and SOC Codes

Note: n/a is not applicable.