Sarah Atkinson will be joining us at Progressive Britain Conference 2024 on May 11th, at our panel ‘Is Labour serious about class?’. Get your tickets to hear more from her there!
The UK is in a productivity slump. Getting out of it means motivating people to realise every ounce of untapped potential. Analysis of Labour Market Statistics suggests we need to raise participation in the labour force to support growth and raise living standards. But how can we expect people to work to their fullest ability if they feel that opportunities are out of reach? And that even if they get there, they won’t be fairly rewarded?
The gap in opportunities between those with means and those without is becoming a gulf. Inequality in education and income has grown. Social mobility has declined. And young people have noticed: their confidence that hard work will bring them a better life has collapsed. For the next government, rebuilding trust in the fairness of our economy is vital.
That means ensuring that opportunity is available to all, regardless of background. So Labour’s commitment to ‘shatter the class ceiling’ by reforming training and education is much-needed. But we know that the barriers to opportunity don’t end at the school gates. The workplace can be a powerful driver of social mobility too, but it is currently entrenching inequality.
Every year at the Social Mobility Foundation we publish the Class Pay Gap, measuring the difference in pay between those from working-class backgrounds and their more privileged colleagues in high-level occupations. This stands at £6,291 a year – or 12% less – meaning that they effectively work 1 in 8 days for free. In the finance sector, the gap stretches to £17,500 per year. It still pays to be privileged.
And your background doesn’t just affect your pay, but your progression. In the legal and financial sectors, research suggests that those from lower socioeconomic backgrounds are promoted more slowly than their better-resourced peers, despite no difference in performance.
All this is unfair, but it’s also bad for business. Failing to promote and reward the most able candidates means that organisations are missing out on the most capable managers and leaders. It means people aren’t motivated or able to fulfil their economic potential – our research has shown that the Class Pay Gap puts young people off pursuing top careers. According to one estimate, improving social mobility in the UK to the average level in Western Europe could lead to a 2% increase in annual GDP. For a Labour party focused on improving both opportunities and growth, this is a perfect alignment of values.
That’s why Labour should make all large organisations collect and report socioeconomic background data for their workforce.
This would give a widespread understanding of workplace barriers to social mobility and create impetus for change. We’ve already seen how effective this can be with the gender pay gap, which has reduced to its lowest level since reporting became mandatory in 2017.
Some might argue that gathering data on class would be too complex and bureaucratic. But there’s a simple, robust way measure it. Many businesses have done so for years. The objective indicator of class is socioeconomic background, and measuring it is as simple as adding a question about the occupation of the main household earner at age 14 to existing diversity surveys. This can be supplemented with additional questions about school type, free school meals and whether your parents went to university.
Sectors like finance and law have identified a problem with elitism and started collecting data to understand it. The Solicitors Regulation Authority requires firms to collect and publish socioeconomic background data. The Financial Conduct Authority and Prudential Regulation Authority are currently considering asking regulated firms to report this data on a voluntary basis; we and a host of other organisations urged them to make this mandatory. Indeed, many employers are already acting by collecting this data and entering our Social Mobility Employer Index to improve their practices. Asking all large organisations to do their bit would bring regulation in step with our most forward-thinking businesses, levelling the playing field across sectors.
Turning potential into productivity requires workplaces that work fairly for everyone. That means ensuring the most able people get the opportunities and rewards they deserve, regardless of background. Measuring class across our workplaces will allow us to understand where the barriers are and break them down.
Sarah Atkinson will be joining us at Progressive Britain Conference 2024 on May 11th, at our panel ‘Is Labour serious about class?’. Get your tickets to hear more from her there!
