Effects of education gap increases throughout working life - October 2010

Those who start in temporary employment, but are better educated, will over time have better chances to get fixed jobs as well as being paid relatively more. This general trend is one of the main findings of the Wage Indicator report Income Gap Starters (pdf, 970 kB), published in October 2010 and covering 14 countries. The data indicates that the effects of the education gap tend to increase throughout working life.

While in the starting period the wage difference between the qualified and the unqualified population is narrow, in the following phases it expands to significant levels. An explanation might be that qualified youngsters start working in unqualified occupations despite their educational skills. Presumably, while taking tertiary or university degrees, they work temporarily as waiters/waitresses, receptionists, secretaries, office clerks, cooks or sales assistants. With increased skills and higher education obtained simultaneously, later on they switch to qualified and much more productive occupations, in management, the professions and highly skilled technical jobs. This leads to substantial wage rises, not obtainable by the unqualified population.

The prevalence of temporary or permanent contracts amongst young starters shows a positive correlation with levels of education. Thus: lower education and temporary contract tend to combine well, just as higher education and fixed contract do.  Whereas in the age group 18-21 there is not yet such an overall marked difference discernable, it starts to manifest itself in the age group 22-24. In those 3 years the percentage of those with a fixed contract increasingly exceeds those with a flexible contract: at the age of 22 it is not yet quite 1 per cent more, at 23 it is already 2.5 per cent more and at 24 over 5 per cent more. If you add the education variable, the following picture emerges. Starters with high education more often have a fixed contract (42 percent fixed, against 38 per cent who work on a temporary basis). But those with medium education show the opposite trend: here 53 per cent report having a fixed contract against 57 per cent working on a temporary basis.

Finally, the Wage Indicator data also shows that putting in more hours does not really help to increase hourly wages, or to further one’s career. On the contrary. The main finding is that hourly salaries decline as working hours increase. A reason may be that overwork is commonly seen to occur more frequently in underdeveloped countries, where trade union’s power is relatively weak and labour laws are more flexible.

Download the full report Income Gap Starters (pdf, 970 kB)

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