February 2025 marks the centenary of the death of York-based industrialist Joseph Rowntree. A hundred years later, the principles for sustainable employment that he and his family developed at their chocolate factory continue to inspire many firms. As an owner, Joseph saw that compassionate leadership and informed managerial organisation were needed to help underpaid working people become more productive, achieve better wages and rise above the poverty line.
His son and successor Seebohm Rowntree went further, noting in 1919 that “the present industrial organisation of the country is unsound”. As both an industrialist and a Quaker, he believed it was his duty to nurture the “guiding light” of each member of his staff.
Although influenced by the ideals of their faith, both men were also responding to the times around them. The appalling levels of poverty within Victorian and Edwardian society were impossible to ignore, but were made socially tolerable through the myth that hardship was the result of individual failings. At the end of the 19th century, Seebohm, with Joseph’s support, surveyed more than 11,500 families in York, pioneering a new style of interviewing real people to collect life histories and to record the income and expenditure of working-class households. He was able to show that much poverty was caused by low incomes, not spending habits. Many of those affected by poverty were in work, but low wages meant they were unable to provide a decent standard of living for their families.
Turning to the present, in-work poverty continues to be a feature of the UK labour market, with employers’ decisions and practices around pay and progression playing a central role. Severely constrained training budgets and limited opportunities for progression (due to relatively flat organisational structures in sectors such as retail and hospitality, where the incidences of in-work poverty are highest) leave employees with few routes out of low-paid jobs.
Weak demand for skills has implications for local economies
Policy in England under successive governments has largely focused on the supply of skills, and has been geared towards increasing and improving individuals’ skills as a response. Much less attention has been paid to employer demand for skills, or to improving how skills are used within the workplace. Weak demand for skills has implications for both individuals and local economies. For individuals, it affects the quality of work, wages, and their ability to develop their skills and move on to a better job. Local economies with weak demand for skills tend to have more low-skill/low-wage firms that compete primarily on cost rather than quality.
Increasing employer demand for skills in low-wage sectors is often about “incremental innovation”—gradual improvements to processes, goods and services. Low-wage sectors are often labour-intensive, and skills, management and working practices are likely to be important drivers of productivity improvements. Strategies include producing higher-value, more customised goods and services.
Cities and local enterprise partnerships (LEPs) in areas with weak demand for skills should seek to better integrate skills and economic development policies, and to link firms to wider support that can help develop their business, management and leadership, and their use of workforce skills. This should include a focus on incremental innovation in sectors with lots of lower-wage jobs.
They should also maximise the role of larger public sector employers as examples of good practice, and use their influence to cascade this good practice through their local supply chains. LEPs can also play an important role in encouraging businesses to learn from each other through peer-to-peer networks. A partnership approach will increase workers’ chances of finding jobs where they can use their skills and have opportunities for progression.
