Pay progression in routinised service sector work: navigating the internal labour market in a fast food multinational company

• Author: Peter Butler,Anita Hammer
• Published date: 01 July 2020
• DOI: http://doi.org/10.1111/irj.12302
• Date: 01 July 2020

Pay progression in routinised service sector

work: navigating the internal labour market

in a fast food multinational company

Peter Butler and Anita Hammer

ABSTRACT

The United Kingdom’s widespread use of low-skill, low-paid employment has been

well documented. It has been argued internal labour markets (ILMs) benefit such

workers, affording them with opportunities for progression. Relatively little is known,

however, about the impact of ILMs on entry level workers undertaking routinised

service sector work. Drawing on qualitative data, this article explores the prospects

on offer in a market leading, fast food multinational company. Potential enabling

features include on-the-job training, a transparent and integrated pay structure and

a professed culture of progression.Occupational movements to positions above the

low-pay threshold are, however, relatively rare. We conjecture this contradiction is

the result of the business context in which the firm operates. The findings suggest that

in sectors where price leadership strategies dominate, escape from low pay is likely to

be exceptional, even within large organisations featuring some of the classic charac-

teristics of ‘pure’or strong ILMs.

1 INTRODUCTION

Getting into and progressing in work has been identified by successive governments as

the best route out of poverty (e.g. Devins et al., 2014: 9; see also Taylor, 2017: 11).

From this perspective, the recent record high numbers of people in work have been

depicted unambiguously as evidence of ‘a buoyant jobs market with plenty of

opportunities available’(Gov.uk, 2018a). Notwithstanding the impressive headline

statistics, around 19 per cent of UK employees are engaged in low-waged work—

(D’Arcy, 2017: 4–5), defined as earning less than two thirds of the hourly median

earnings (Lloyd and Mayhew, 2010: 429). Such employment is notoriously difficult

to escape, and numerous studies have identified how active labour market partici-

pants, the ‘working poor’, become entrapped in cycles of recurrent poverty. (e.g.

Shildrick et al., 2012; Tomlinson and Walker, 2010). These data have fuelled

discussion concerning how to improve progression in low-paid, low-skilled work,

and various formulations have been suggested. According to Devins et al. (2014: 6),

internal labour markets (ILMs) ‘based on coherent packages of work and learning re-

lated practices are recognised to be an effective means of supporting the development

❒Peter Butler, Department of Politics, People and Place, De Montfort University, Leicester, UK and

Anita Hammer, Department of Politics, People and Place, De Montfort University, Leicester, UK.

Correspondence to:Dr. Peter Butler, Reader in Employment Relations, Department of Politics, People

and Place, De Montfort University, Leicester LE19BH, UK.

Email: pabutler@dmu.ac.uk

Industrial Relations Journal 51:4, 351–371

ISSN 0019-8692

© 2020 The Authors. Industrial Relations Journal published by Brian Towers (BRITOW) and John Wiley & Sons Ltd

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribu-

tion and reproduction in any medium, provided the original work is properly cited.

of workers’. Indeed, the classic literature on ILMs (Doeringer and Piore, 1971) ar-

gued such structures benefit low-skilled workers, affording them with company spe-

cific skills, career advance and opportunities for pay progression that are largely

sheltered from external pressures. The precise impact of ILMs on pay and career pro-

gression opportunities for low-skilled workers has, however, received limited critical

attention, and a more complex understanding of work settings is required. It has long

been accepted that employment arrangements in ILM firms show more variation than

is generally recognised (e.g. Osterman, 1982: 353). That is, there is a diversity of ILM

systems subject to a process of change (Grimshaw and Rubery, 1998: 218). A key dy-

namic has been the significant downsizing of ILMs in response to pressures both in-

ternal and external to the organisation (Grimshaw et al., 2001). Where they remain,

this is likely to be in a highly variegated format (Grimshaw et al., 2001: 36–37) with,

for example, some jobs assigned to the ILM and others open to external candidates.

The various permutations open the way for both tall and truncated career paths. Cer-

tainly, some organisations provide estimates of the proportion of unskilled workers

that progress to more senior positions (UKCES, 2012: 25). More fine grained data

are needed, however, on the hierarchical distance travelled, the opportunities that ex-

ist for lateral movements and the extent to which workers are in receipt of portable

skills and qualifications enhancing their broader market power. The overall aim of

this article is therefore to evaluate whether modified or hybrid ILMs can offer oppor-

tunities for career and pay progression for low-skilled workers in the manner that

pure or ‘strong’(Simms et al., 1988: 6) ILMs formerly did for an earlier generation.

This account addresses such issues by drawing on ongoing research (2015-) in a fast

food multinational company (MNC). The context is apposite. The use of ILMs has

been well documented in this sector (e.g. Gould, 2010: 795), and fast food has been

described as the ‘ultimate melting pot’for the working poor (Newman, 1999: 145),

employing those with ‘a dearth of alternative employment options’(Leidner, 1993:

50). The article is structured as follows: initially, an overview is provided of the rele-

vant literature, followed by a summary of the methodological approach underpinning

the study. The results section explores the workings of a well-established ILM in the

case study organisation. In the concluding section, the various empirical observations

are afforded theoretical scrutiny.

2 LITERATURE REVIEW

2.1 Low-pay and the erosion of internal labour markets

The widespread incidence of low-skill employment has been well documented (e.g.

Lloyd and Payne, 2011; Yates, 2017). Critical accounts (e.g. Lloyd and Payne, 2011;

Yates, 2017) have identified a range of problems associated with this including limited

access to training, precarity, that is, temporary or transitory employment status, and

the failure of organisations to structure jobs around childcare. A closely related dy-

namic is the high proportion of low-paid workers that has altered little in 20 years

(D’Arcy and Finch, 2017: 4). According to the Social Mobility Commission, of all

those low paid in 2006, by 2016, just one in six (17 per cent) were ‘escapers’(D’Arcy

and Finch, 2017: 1).

An important (and closely related) contextual backdrop to the high incidence low

pay is the growing dominance of market-driven employment policies and practices.

A direct outcome has been the declining importance of traditional labour market

352 Peter Butler and Anita Hammer

© 2020 The Authors. Industrial Relations Journal published by Brian Towers (BRITOW) and John Wiley & Sons Ltd