Page 46 - IDEA Study 3 2018 Low skilled

In 2016, the median gross monthly wage of low-skilled employees was CZK 18,252, ranging from CZK 11,093 at the 10th percentile to CZK 29,261 at the 90th percentile. The median gross monthly wage of the low-skilled in the private sector was about 30% higher than that in the public sector. The median low-skilled earned about 55% of the median gross monthly wage of the high-skilled. The wages of the low-skilled grew somewhat more over the 2014-2016 period than the wages of the other skill groups, in particular in the private sector. This increase was most likely driven by the gradual increase in the statutory minimum wage and, to some extent, by the tight labor market. Low-skilled women earn much less than low-skilled men, but only in the private sector. The low-skilled is the only group in which the median gross monthly wage stagnates or even declines with age. The least paid low-skilled jobs are in Elementary Occupations and among the Services and Sales Workers. There is substantial variation both in the share and in the labor market performance of the low-skilled across regions. The share of the low-skilled in the population is almost twice as high in Ústecký and Karlovarský regions than in the whole Czech Republic. Regions with a higher share of the low-skilled also face a higher unemployment rate for this group. In some regions, the low-skilled face both low wages and low employment probability, while in other regions they are better off in both aspects. The low-skilled are more likely to be inactive in regions with low wages and higher effective taxation. An alternative definition of the low-skilled as “the low-paid“ (those earning a gross monthly wage less or equal to the 10th percentile of the wage distribution) addresses the groups of individuals that may be misclassified by the standard definition of ISCED group 0-2. Based on our definition, only about 11% of the low-skilled in the private sector and 40% in the public sector belong to the group of the low-paid. On the other hand, 5.6% among the lower middle-skilled (ISCED group 3) in the private sector and 16.3% in the public sector are classified as the low-paid. Plant and Machine Operators and Assemblers with ISCED 0-2 level of education are probably (based on their wage and occupational skills) misclassified as the low-skilled, whereas lower-middle skilled individuals (ISCED 3) working in Elementary Occupations seem to be low-skilled (based on their wage and the skills used in their jobs), but are classified as higher skilled by the standard definition. Based on the presented evidence, we identify the main obstacles preventing the low-skilled from (re)entering the labor market and formulate policy recommendations. There is a high share of inactive among the low-skilled. The key obstacle to the labor market participation of the inactive low-skilled is low incentives to work. The non-working low- 44