Academic journal article Polish Sociological Review

Solidarity Lost? Low Pay Persistence during the Post-Communist Transition in Poland

Academic journal article Polish Sociological Review

Solidarity Lost? Low Pay Persistence during the Post-Communist Transition in Poland

Article excerpt

Introduction

Over the last years, employment inequality has become a topic of concern among scholars and policy makers. This is due to the growth in various forms of non-standard employment, often associated with negative work characteristics (Giesecke 2009; McGovern, Smeaton, Hill 2004). As employment relations become less stable, a dynamic, life-cycle perspective becomes more important as a basis of job quality assessment (European Commission [EC] 2008). In particular, an important and policy relevant question is whether 'bad' jobs are temporary, acting as stepping stones to better employment, or trap workers for prolonged periods of time.

This article analyses the persistence of low wages, which are commonly considered one of the most important aspects of poor job quality. The question whether low paid employment is transitory or long-lasting is particularly important given the growth in earnings inequality in many industrialized nations. The consequences of this change are a subject of controversy among researchers. Some argue that increasing earnings inequality might not be a serious problem if accompanied by high wage mobility. If workers have many opportunities to escape low-paid employment, inequality in lifelong earnings is not as large as cross-sectional analyses suggest (Dickens 2000; OECD 1997). Conversely, if low wage jobs are traps for some workers, the resulting social cleavages and disparities in the quality of life cannot be overlooked by policy makers. Such inequalities may be regarded as both a sign of declining social solidarity, and a factor contributing to its further decline (Paskov, Dewilde 2012).

Studies of the wage mobility of low paid workers from different countries suggest that the latter is closer to the truth. Throughout the second half of the 1990s, on average, around 50% of low paid individuals in the EU remained low paid after one year (Clark, Kanellopoulos 2009; EC 2004). Although the probability of exiting low wages increases with time, the percentage of low paid workers whose wages remained low after several years appears significant in EU countries: 40% for three-year pay transitions, 30% for five-year transitions, and 26% for seven-year transitions. When those who exited employment were excluded, the respective percentages were: 55%, 41%, and 37% (EC 2004). Other research results suggest that even if individuals manage to find better paying employment, they face a high probability of slipping back into low wages, and the longer they remain in low wages, the less likely their transition to better pay (OECD 1997; Rutkowski 2001a).

However, much less is known about the long-term trends in low pay persistence. Although there are many studies of long-term changes in wage inequality and wage mobility across the whole earnings distribution (e.g., Dickens 2000; Gernandt 2009; Kopczuk, Saez, Song 2010; Luciflora, McKnight, Salverda 2005), analyses which focus directly on low pay transitions usually cover a relatively short time-span (typically around five years). This makes them unable to systematically control for the influence of business cycles on the persistence of low earnings. To my knowledge, the only analysis covering a longer period (1984-2004) and taking into account the relationship between the general economic situation and chances of individual mobility out of low wages is a recent study by Aretz and Gürtzgen (2012). Further, there are practically no detailed analyses of low pay transitions in post-communist societies. We do not know the extent to which research findings from other countries are generalizable to transition economies. In this context, Poland seems an especially interesting case. Earnings disparities on the Polish labour market, particularly in the lower half of the wage distribution, are among the highest in the EU. The share of low paid workers is also relatively high (Bachmann, Bechara, Schaffner 2012; Magda, Szydlowski 2007).

The present analysis attempts to fill the gaps in the existing literature by focusing on long-term changes in the persistence of low wage employment in Poland and the relationship between the rate of those changes and the general economic situation throughout the post-communist transition period. …

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