Reproducing but Potentially Challenging the Low-skills Equilibrium: A Study of Small Food Manufacturing Firms in the UK

Low-wage work is of growing significance in the UK. This paper tests the model of the low-skills equilibrium (LSE) through a study of 27 small firms in a sector, food manufacturing, widely identified as being in an LSE. Three hypotheses are tested. (1) There will be a single, fixed equilibrium. We find more variety, reflecting the specific circumstances of firms. (2) An equilibrium is sustained by weak support institutions and a product marked dominated by low value-added goods. The expectation about institutions is supported, but the product market permitted some, albeit weak, opportunities to escape the LSE. (3) Skills will be low, and workplace regimes will be characterised by work intensification. Some firms were developing employee skills. Work intensification was rare, reflecting the absence of Taylorisation and the importance of face-to-face relationships. Overall, some firms had the will to escape the LSE, but weak institutional support and a ready supply of labour substantially reduced the incentives to do so.