Totally Rewarding Chats | Ep. 11: Why The Hourly Wage Matters

The real impact of minimum wage on our economy

Why does minimum wage matter beyond simple economics? Join Sean Luitjens and Duncan Brown as they unpack the complex effects of minimum wage policies on our economy and society. Discover why, despite low unemployment rates, high levels of poverty persist and learn about the critical role of investing in talent and providing career progression opportunities within companies.

They discuss how technology, especially artificial intelligence, is revolutionizing employee upskilling and creating synergistic benefits for both employees and employers. This conversation is a must-watch for anyone interested in understanding the deeper implications of wage policies and how we can create a more equitable economic landscape.

In this episode:

• Host, Sean Luitjens, General Manager of Compensation Benchmarks, Visier

• Guest, Duncan Brown, Independent adviser, Principal Associate IES, Visiting Professor, University of Greenwich

Episode transcript:

Sean Luitjens
All right, so another totally rewarding chat. Ironically, this one is gonna be probably, I'm gonna make Duncan talk a little bit about minimum wage, which is a little bit about his soapbox and expertise around the world. It's coming after we spoke with someone about CEO pay ratio to employees. So this is kind of a cool flow. So how's it going, Duncan?

Duncan Brown
Excellent Sean, thank you. How are you? Okay?

Sean Luitjens
I'm good, I'm good. I'm excited to dig into this. Kind of a weird, like I said, just kind of a weird timing of how these all kind of set up. I don't know how they'll come out in the order, but for me it's kind of interesting.

Duncan Brown
No, I feel very privileged, mate. I feel honored, I tell you, to be involved in such a robust company. I'm not sure whether it's an indication of my prowess or my age or whatever, but no, thank you ever so much. I'm delighted to be involved.

Sean Luitjens
So before we get into the fun stuff, so that people know why I wanted to chat with you besides it's always been good, is give us a background, your elevator pitch and however many floors is necessary in the elevator, but give us your background because I would butcher it.

Duncan Brown
Sure, yeah, no, in a way it's pretty boring my whole career 35, 40 years in pay really and broader reward. Started out at GM's Vauxhall operation in the UK as a general personnel officer doing a bit of everything. Kind of decided I didn't know enough about finance and so went and did an MBA at London Business School and did half of that at MIT, which was great on exchange. And then went into consulting and I've spent most of my career with large consultancies, but I kind of bounce when I'm in consultancies.

I get a spell where I think, hang on a minute, is there any evidence for any of this stuff? Does it really work? So I kind of go into academia or semi -academia and work for research institutes. So I've kind of about and then do that for a couple of years and then think, hey, this stuff is totally irrelevant. So go back into consulting. And now I'm kind of in that portfolio stage of my career. I do a bit of all of it as well as a lot of pro bono charity work on charity remuneration committees etc and just doing work teaching quite a lot on masters programs and trying to raise the the level and skill set of folk working in pay and reward I guess.

Sean Luitjens (02:38.414)
So I'm not gonna lie, like I've either got wanted to switch jobs for whatever reason or started to get burned out about what I'm doing. And then I go spend some time in the wilderness. Never once have I thought, you know what I need? Some time in academia. I will give you credit, somebody's gotta go and it wouldn't be me. Although I do enjoy go to a couple of.

Duncan Brown (02:52.287)
Yeah.

Sean Luitjens (03:00.142)
couple of uni's around here and talk and I can do one class, you know, about stuff. And then I'm like, okay, back to my world. So I give you mad props for being in that space. I think that's awesome to kind of give back.

Duncan Brown(03:16.127)
Yeah, some of it I do. So I do with some of World at Works online programs. I've been involved with them for years as well. And they do one, particularly a global comp program, which I guess is targeted at senior HR and finance folk moving into the top comp job. And that's really fun. You get really experienced, interesting folk, and they're genuinely global all over the place. Lebanon, Japan, China, and that, yeah, I learned a lot from those so that's good fun but yeah it's good just to see you know these very bright I hear people saying all the time we're not getting good enough people coming into HR these sort of 25 30 year olds doing HR masters at King's and LSE in places my god they're bright but it's interesting what they've got experience in compared to when we were in our 20s and early 30s but what they haven't.

So areas like job evaluation, key to what we now call pay equity. If you ask people now what they use, they might be able to tell you the system like Cornferry Hay or Mercer system. But then you say, but how does it work? How does it actually value jobs? And most of them don't know because it's hidden away in the algorithm. And yeah, it's become more plumbing, which in effect, if it's sufficient is great, but if they're hiding the basis for making judgments on pay, you know, the AI debate is nothing new. It's job evaluation technology. We've had the same debates for 20 years. But it's such an interesting area to be in, I think. And now you're seeing more HR directors coming up the comp route, whereas I think it was seen as a bit of Compton Bend was seen as a bit of a backwater, a bit of a geeky backwater. And I think that's really good news. And it's just so current now in the press, in politics, et cetera, that I think it's seen as quite an area to be in, which brings a lot of responsibility with it.

Sean Luitjens (05:27.502)
Yeah, and probably topic for another day. I know we're putting a panel pot chat with you. It's, cause at that whole job evaluation thing is super interesting before we dive in. So I usually ask everyone, so what do you do for fun or hobby outside of work to show us you're an actual human and not AI would be great.

Duncan Brown (05:43.007)
Yeah, yeah, yeah, going to a portfolio career, building the leisure side has been harder. And charities are the biggest lies in the world. If a charity for a trustee or on an independent role in the HR board committee says, it's only a day a month, my God, don't believe them. I tell you, it's like three or four minimum.

But no, I've got, as I was saying, I've got two girls in their twenties, very different. One works the house of lords, the others in advertising. And so yeah, I spend quite a lot of time helping them and stuff and just being outdoor. I love being outdoors. I've always, running was great to combine with my international traveling consultancy. So I still run. When my body allows and I just love being outdoors.

Sean Luitjens (06:42.062)
We have then come and I've always said one of the greatest ways to tour a city is to, it's not for everybody, but you know, take a run, you know, casual run, walk, stroll through a city. You can see a lot of it early hours. And so it's been a cool way to see cities. And now there's some other tools that even help more when you're running Chrome up with loops to see everything. So it's a great way. So let me get your... Huh?

Duncan Brown (07:04.287)
And I enjoy sport as well. I enjoy sports and yeah, pay in sports I find fascinating. Was it 96, I think the US baseball season didn't finish because there was a lockout of the players and the arguments were over pay. And Towers where I was then, we did some real interesting analysis around is pay related to performance? And kind of as you read about 43 % of Smith and Nephew shareholders rejecting the 30 % increase in their chief executives pay propose yesterday. You kind of think, have we learned much?

Sean Luitjens (07:45.28)
Well, you've got to go the other way. Are they gonna get a salary cap in the EPO? And does that mean that, as a Gunners fan, I kind of like the fact that we overspend, which means we win more than we lose. But that'll be interesting to see how that works out when you put everyone on a level playing field. So let me get you on your soapbox. So before we get too far in. And so when we first had it, so minimum wages, and I'm just gonna start it off with,

Duncan Brown (07:50.047)
Yeah. Yeah. Sure.

Sean Luitjens (08:14.158)
Why should people care about minimum wage and why isn't it just a supply and demand issue in the marketplace? Unless you kind of run with that from there.

Duncan Brown (08:25.203)
Yeah, it's dead interesting because the US and UK and Europe patterns on the minimum wage have varied significantly with the US federal rate not moving for whatever it is, 20 years or something. But in clear sectors and cities and states, we've got $15 and stuff at a more realistic level. I guess the UK positioned itself somewhere between Europe and the US in that it didn't have a minimum wage until the Labour administration in 1997.

But kind of got it and now moved to a situation where just in last month, the UK achieved the long term target and set itself of the minimum wage being two thirds of average earnings, which is high by continental European standards, that's high. Traditional economics view, classical economics would be you'd be putting people out of work because that's uncompetitively high. But it hasn't, you know, we've still got very low.

Sean Luitjens (09:37.806)
Can you explain what that means for us Americans? Because they just bumped the right ear.

Duncan Brown (09:43.167)
So, yeah, so there are a number of European countries that set their minimum wage as a ratio of average earnings. So it's a formula. The UK doesn't, it's not a formula, it's kind of independent panel that recommends to the government called the Low Pay Commission. But they've had the target of getting it up to two thirds of average earnings.

So average earnings in the UK is kind of about 30k sterling. And so this, yeah, takes the minimum wage. It moved up about 10 % as of April. So it's about 20 ,000 just a little bit for a full time kind of 38 hour week. It's about 20 ,000 sterling. So you kind of think, hey, we've got minimum wage and you know when the British welfare state was created in based on William Beveridge's proposals in the 1945 Labour government, the kind of assumption was if you had a job that it was based on addressing five evils and one of them was idleness. So the kind of assumption was that if you had a job you were okay.

And I guess what's very different now is UK has, like the US, very low levels of unemployment by historic standards. Most people are in work, but we've got high levels of poverty. And so about a quarter of kids live in poverty. In some areas such as Scotland, it's higher. The majority of those kids have at least one parent in work.

So in work poverty, I went and worked for five years for our HR Institute here, the Chartered Institute of Personnel and Development, which kind of trains HR folks in the UK. We've got about 150 ,000 members. If you had said to me at the start of my career, we would have a big area on the website about in work poverty, and it's one of the most visited areas of the website, I would have just said, what are you talking about?

That's for charities and whatever. And yet that's it. It's one of the most popular areas of the website. So lots of academic debate for economists and sociologists or whatever on why we're in this situation, gig economy, whatever. But we are in a situation where a lot of people are not earning enough to live on. And estimates vary.

Sean Luitjens (12:27.566)
But I think that's the argument here. So if I break that down, if I break 20k a year down, you know, that works out to be about 10 quid an hour. Make the math easy for me. I know you might divide by 2080, but I'm a simpleton, so I'm gonna divide by 2000 and come up to about 10 quid an hour which works out to be the minimum wage in a lot of states here, if you do the conversion, similar.

So if you say cost of living, similar -ish, and obviously the debate between whether you're in the Midlands or you're in London or you're somewhere else, cost of living changes. But here you're seeing 15 not be enough and you're seeing some push to 20. And so I think it's similar. We do have states that are lower because it's run by the state.

Duncan Brown (12:49.919)
Yeah.

Sean Luitjens (13:12.59)
But it's 10, I guess I can buy the whole, you still have people in poverty, because we have the same issue here. And if I equate that, I guess I thought two thirds was higher of a larger number being an American. So how, I mean, how do you continue to move that up?

Why is it important to move that up beyond the social standpoint of you've got people in poverty and it's the right thing to do? But then you press that with the economics because here what we're seeing is, I don't know if you were aware, but some places in California have made the minimum wage in fast food to $20 an hour. And so the ramifications are, of course, the businesses saying, well, okay.

Duncan Brown(13:46.879)
Yeah. Yeah.

Sean Luitjens (13:54.35)
I'm just going to have less workers. So I still have to work to the same number. What you've told me now is my fixed cost for each one of these humans has gone up. And so for every four of you, I have to let one go.

Duncan Brown (14:08.191)
Yeah, I guess.

Sean Luitjens (14:09.102)
So how do you see the organizations, how do you see the country, you know, how do you see the best way to economically handle it? Because that's always been the supply and demand piece, I guess.

Duncan Brown (14:17.663)
Yeah, I mean, in the UK, I guess it's, yeah, the answer to that is too far. One is low pay has been getting nearer to an average number that's been falling in real terms. So since the financial crash in 2008, yeah, we still in real terms adjusted for inflation, the average worker is not earning what they were before the financial crash and that we haven't seen that if you take every in my lifetime you take every prime minister and parliamentary government there's been growth in real wages bigger smaller but we've always had growth until this government and various estimates but we probably haven't seen a fall in living standards like this since the Napoleonic War so you know, this is the fact that I've never seen it in my career, as long as it is, you know, no wonder people are kind of struggling to understand and deal with it, because we haven't seen it in modern industrial times. So, yeah, the UK, I think in 2010, we were 11th in the league table of income, GDP per capita, we're now 23rd.

So that that average level has been falling back. So even people on average earnings are struggling. There's a kind of government supported independent commission called the real living wage, which makes up an independent academic style calculation of what do you actually need to live on? And that is about a thousand sterling higher than the still the minimum wage.

It's confusing here because the government's tried to kind of muddy it by calling the minimum wage the national living wage. But that's the sort of government minimum is about a thousand sterling below the real what you actually need to live on. And in London, it's about 2000 below. So, you know, you get a cost of living crisis essentially once you get a spike in inflation as we've had, and yeah, a lot of people into poverty.

Sean Luitjens (16:41.678)
So I guess two things, I guess first, good to know you weren't working, two things, I guess first, good to know you weren't working during the Napoleonic era, so that you didn't see that. And then secondly, so how do you solve it? Because I think it's interesting, we think it's an American problem, but it sounds very, like I'm sitting here listening, it's very, very similar.

So we're seeing most places the livable wage is slightly above with the prevailing minimum wage or prevailing wage for whatever industry is. Every time there's kind of a knee jerk or a reaction to move minimum wage up, you move unemployment, right? So this is just fundamental economics, I think. So, how do you see companies, countries, and states? How do you solve this problem of a wage, you know, before you get to the scruples issues of pay in other places.

Duncan Brown (17:39.743)
Yeah, well, I think, yeah, first one is, you know, if when you set up in business, you've got to be able to cover your costs, you need to pay your suppliers what they want for their materials, etc. So the extent to which you should pay what people need to live on, I think it's a real interesting question, which, yeah, I had never really addressed it in my career. I know, you know, I've done work on real living wages in supply chains in

Far East and developing countries. I've never done it in a sort of modern economy, but it's become key in the UK. But I think the second thing is we've recognised it's not just about your pay or the hourly rate of your pay, because if you're in very insecure work, perhaps you've been pushed into self -employment by a gig company and legal questions around is that self -employment or not.

But you're certainly bearing all the risk, the shift out of DB pensions to DC pension, lower contributions, again, you're bearing all the risk. And yeah, I think the great, you know, during the 2010s, the UK government had a policy called austerity. Corporates had a similar policy. It was called total shelled return and total shelled return, which drove executive incomes to very high levels with their incentive plans also drove massive cost cutting. And just things like chipping away at sick pay, low paid workers, hey, they become eligible after one year. Why don't we make that five years? Then we save some money because hey, insurance premiums are going high. So let's save some money on that. And throughout the 2010s, we saw that. Why don't we go for zero hours contracts?

So that Sean I'll ring you up on a Sunday night or text you on a Sunday and say okay Sean you worked 30 hours last week sorry we've only got demands for 15 hours this week and you find that out on a Sunday evening you know that's a nightmare as well as the the kind of absolute level of your pay and those are right that's where the growth in the UK economy was in in the 2010s it was in low skilled flexible jobs but the trouble with the flexibility was it was imposed you know there's lots of good things about flexible working you know it gives it means mums with kids can can work more we've got good employment rate of of parents with children so there's some good features but there's some bad features as well which is if you're not earning enough to live on and you don't know what you're going to earn next week you can really be in trouble and I guess you know, when I chat with HR people, they're not comfortable with a lot of these practices, but we've done it.

We put in these zero hours contracts, we put in the arrangements, you know, Uber and those companies, they have HR functions that claim, you know, self -employment gives these people freedom, etc. They can work when they want. And for some parts, their workforce, you know, if I'm a student or whatever, that's great. You know, if dad's supporting me like, like me and you, then that's great. Our kids can earn a bit when they want to. But if you're making your living like that, and you get told next week, you've only got half your earnings this week, and you've got to pay the rent, that ain't good.

And, you know, what have we seen as a result? We saw levels of mental health, we saw levels of health inequality massively grow. You know, if you're low income in the UK, you die. five years earlier than a higher income person like me. It's really impacting. And then guess what? COVID. And I think COVID with the cost of living crisis, I think HR finally, we got some influence at board level. And yeah, the majority, two thirds of UK companies have done something. They've given a cost of living, having argued for 20 years that, we don't take any account of inflation. It's down to corporate performance and affordability, well, thank God they did. And they made payments to staff last year, because a lot of them would have been in serious trouble if we hadn't done, even at higher income levels, because now of the push in mortgage rates, people are really struggling. And we've helped out, and that's great.

And I think we need to learn from that and learn that, guess what? When a global pandemic hits, cuts to sick pay maybe don't look so good. And another great learning in the UK has been if the commonest change to sick pay has been harmonisation, that companies recognise that executives sitting away in their suburban luxury house online in total safety with fantastic private medical benefits versus...frontline customer service staff on the minimum wage serving you and me in the supermarket at risk of catching COVID. UK, not as bad as the US, you have got to have national health. You can't do not insure people and not cover them for health-wise. But even so, companies recognize this is totally inconsistent. If anything, the people on the frontline should have the better medical benefits. And so you've seen those policies harmonize.

Which basically has been improving the benefits for lower paid workers. And again, we're relearning the people who founded the HR Institute in the UK were the Quaker owners of businesses like Cadbury's, who reckoned, you know, they built a welfare state for their employees, partly out of their beliefs, but partly as well, because they knew if they wanted a high performing workforce, you don't worry.

Worrying about where are your kids? Are they ill? Are they in school? Have we got a home to go to? Give them housing, give them schools, give them hospitals and actually guess what? You get a better performance as a result. And I think we kind of lost that clarity, particularly in business over the last 20 or 30 years. And it's taken a massive health crisis and a cost of living, global cost of living crisis to kind of re -educate us, I think.

Sean Luitjens (24:27.214)
So, I mean, kind of, I guess my last question would be, I guess, what, why don't you see supply and demand influencing the rates? So this is the thing, I guess, you know, over the years I've thought would fix it. So obviously if you have high unemployment, supply and demand basically says, I can pay less, right? You're seeing them, companies struggling to find help, especially with quality help to your point, you know, you get what you pay for, but it's not driving rates up.

And so why is that? I mean, from an economic standpoint, why is supply and demand not doing what supply and demand you would traditionally think does to the pricing elasticity?

Duncan Brown (25:10.175)
Yeah, I mean, I think the, you know, a number of features of the way the economy has grown, certainly in the US and UK, we've moved to more of a winner takes all economic model, where, you know, the top level, whatever you are, not just corporate chief executives, you know, if you're JK Rowling compared to Agatha Christie, or whatever, you earn shed loads more at the top.

But correspondingly at the bottom, again, debate over the changes, you know, is it decline of trade unionism, which is in the UK, like the US below 10 % of the workforce and focused on that low paid, predominantly female, that's where ethnic minority folk are overrepresented, that's where migrant workers are overrepresented. The least powerful people in the labour market are operating at that level.

And so they need protection basically. I think the other factor we've learned on low pay as well as, you know, it's not just the pay, but benefits are pretty significant as well, particularly if the state's been cutting benefits. It's also about progression. And yeah, when I started at Vauxhall, we used to take on 80 apprentices and... within the senior management at Vauxhall then, I don't know, 20, 25 % of the management had come up from apprentice level. And now if you look at people who are low paid in the UK, say in the bottom 10 % of earnings, it's fewer than 10 % of them get out over a five to 10 year period. So if you're in low pay, you stay in low.

And yeah, I'm doing a lot of work at the moment on skills pay pay progression, because we kind of got used to just buying in talent really, you know, the talent management emphasis was self development, develop yourself and buy in the talent. And we're now realizing some of the effects of that like importing labor market discrimination against women.

Why we've got the publication of pay ranges and salary history discussion bands which seem to be working really well I understand. I only wish the UK would follow the many of the US states that are doing it on that but just addressing progression but I think what we're seeing as well is the markets aren't perfect they're influenced by power they're influenced by politics you know the whole behavioural economics and I think there's growing recognition just reading a review of Joseph Stiglitz's new book and that seems to put a lot more emphasis on the economists need to recognise this factor of power and influence. Yeah, we haven't got perfect markets and so, you know, employers need to recognise that and states need to recognise it. They need to have regulation in place.

And they need to enforce it. The UK probably has a stronger labour market regulation framework than the US, but enforcement is appalling. It's not resourced, it's not delivered. And yeah, there's clearly things governments need to do, but employers need to do stuff as well. And I think that recognition of you know, talent management is not hiring people, you know, who come in like me with a qualification from MIT and the London Business School. You know, what, however you manage me, we're probably going to do okay. What you should be doing is more like X factor, but there's a lot of people at lower levels in your organization who haven't had those opportunities, but have great potential. So talent management should be about identifying and exploiting that potential.

I did a study a few years ago on gender pay gaps. And I went to see a council in East London, one of the poorer areas of London, and the council, there's about 40 local authorities in London. They're quite interesting because they've all got broadly good public sector HR policies, and they're all pretty similar in those policies. And yet their gender pay gaps are really different. Some of them are over 20%.

Duncan Brown (30:01.119)
The one I went to in East London has no gender pay gap and that's what I was going out to find out. How do you do it? How have you got no gender pay gap? So I went first guy I saw was Barry the chief executive, very interesting chap. So I said how have you done this? Have you got a zero gender pay gap? And he said it's easy nobody wants to come and work in Lewisham and I said to him you are and he said you know if I was in Westminster, Central London, fine, easy to recruit and retain people.

He said Lewisham in East London is just nobody wants to live there. And so he said it forced us to look internally inside the organization and a lot of the lower levels, predominantly female staff, a lot of potential talent. And that's, you know, that's what they develop. Half their senior team are women who've grown up. Interestingly, a lot of them have gone and worked for

Sean Luitjens (30:39.694)
Yeah.

Duncan Brown (30:59.199)
other local authorities in between, but they come back at a senior level and want to work there. And yeah, yeah. So yeah, the gender pay cap is... Sorry, go on.

Sean Luitjens (31:09.838)
Do you think that's been affected by having been around talent acquisition and kind of the space for a long time? You know, in the old days, I'll call them, you'd assume that wherever you started, you would stay forever. And I think the flip side to that was I can invest in someone because the likelihood of them leaving is much smaller. Whereas now you see, you know, CVs, people move.

And it's much more fluid talent market. So do you see the reluctance of companies investing in this talent to move them up? Because I'll play devil's advocate. I'm going to invest in that talent. And as soon as they're qualified, get a little experience, they're going to take off. And so my investment dollars don't get returned. Do you see part of that as that fluidity in the market as causing part of the problem?

Duncan Brown (32:02.079)
When the 2008 financial crash here, UK training investment went like that. We don't have great measures actually of training investment. The Office of National Statistics here does it in terms of days training per employee and it about halved. And that's pretty typical in a recession because you cut training and cut advertising. What isn't typical was then in the recovery, which we had.

Which admittedly was pretty slow, it stayed there and it's still there. So the average UK company invests about half as much as the average continental European country in training. So I guess it's always going to be a balance. You're always going to need to recruit in maybe specialist skills or whatever and grow some of your own skills hopefully.

And I think we went very strongly too far to the to the yeah let's just buy in from the market and now yeah we've still got massive skill shortages and that is forcing companies to say hang on a minute maybe we do need to grow more of our own maybe we need to invest in our people and you know the research on it is is tremendous is tremendous you know the original research on human capital in us shorts and people looking at from your own perspective, you know, is it worth taking a year out to do an MBA? Well, yes, it is, you know, and all the business schools will show you that. Similarly, investing in training, you know, when I started out at Vauxhall, a shop floor job on the production line there, a high performer just can kind of move along the track a bit, and then he bumps into the person who's at the next station.

So we can't add a lot. Whereas, you know, in consultancy, if we hire in someone who's really good, or grow somebody who's really good, they can add two or three times what the average consultant can bring in. So developing people up, there's tons of evidence it really pays off. But we kind of again, we seem to have lost that lesson. And also, you know, the message in the UK for the last decade has been if you want to get a pay increase, move. The average pay increase for movers in the UK over the last decade has been three to four times what you would have got if you'd stayed in that employer and we've seen things like promotions with no pay increase. So here you go Sean have a greater responsibility more stress in your life and yeah we're not going to give you any more pay we might in the future if we're feeling really generous.

Sean Luitjens (34:39.982)
Yes.

Duncan Brown (34:55.871)
It's really interesting, isn't it? And yet, you know, our kids, that's the environment.

Sean Luitjens (34:58.67)
Well, that one to me is always mind boggling. That to me is the most mind boggling short -term thinking move that's out there because the premise is that you just pissed them off, but you gave them a title to go look for another job at a more senior level to find even more of an increase swapping across. So to me, that is the shortest term fix. And I think the short -term fix.

Duncan Brown (35:20.351)
Yeah, that I agree is the dumbest thing. But the controls on paid budgets have generally been tighter than they've been on recruitment. And whether deliberate or not, what it's meant has been, yeah, that's the message we've given employees. And again, I think belatedly, we're recognizing that's pretty dumb. And it's also created problems of...

Sean Luitjens (35:31.566)
Yes.

Duncan Brown (35:46.111)
If you look in the civil service here where we've got broader bands in the senior levels, you've got two groups of people in each band and that's not to do with performance, it's to do with were they internally promoted, which is the lower group, or were they externally recruited, which is the higher group. And that's evident throughout structures and most of the private sector's done it as well. So again, I think we're seeing a rebalancing of that.

And yeah, that if you've got again, predominant female employees, a lot of analysis I do of gender pay gaps is that they're lowering the scale, they're less likely to be have been recruited in hiring up the scale and narrowing those scales in some cases is a good way to address your gender pay gaps. But sorry, I'm getting off the point on low pay a bit here, but I think...

Sean Luitjens (36:43.598)
No, no, I think it felt good. Well, it all.

Duncan Brown (36:45.055)
I think the recognition on low pay is it's basically, you know, that low is good. The lower pay budget award, hey, that's great. Whereas I think in some business at the moment, we should be saying, we're not paying these people enough. Let's pay them more. I think HR needs to have the courage to say, we're going to get higher returns if we pay them more. You know, you and I probably in consulting, okay, when times are tough.

Budgets are tight, but generally, you know, the controls are less than in many businesses on pay budgets, because there is that recognition that high performers can add significant amounts. And

Sean Luitjens (37:28.462)
I think to the analytics that are out there, I think the tools in analytics, I hope it catches up sooner, will start to prove out.

You know, your risk of resignation and turnover and tenure, and then you can add in training dollars. And this is the nerd in me. You know, you can actually count how long it takes to get someone up to speed. Like you can add so much data into a system now and run those analytics to say, actually, if we pay our people, you know, one or two quid more an hour, which moves them from below, you know, two quid would move them from, you know, a thousand quid under a year to a thousand over. like, actually our net net's going to be the same plus performance will be better. Like that math I think cannot be calculated. I think prior it was too much stuff, right? How do you deal with, you know, point of sale data plus store data plus turnover plus labor and pull all that in? No, no humans could do that.

But I think now we have the ability to do that. So I'm bullish that it'll, that what'll happen, in my opinion, hopefully, is a couple of companies will see that. They'll become more profitable and it won't be out of the goodness of some people's hearts that we're trailers, that we're laggers, but they'll realize, well, actually to be more competitive, we have to do this. We kind of have to do the right thing because it's, you know, for the wrong reason. But I'm all good if everyone does the right thing for no matter what reason. So.

Duncan Brown (38:49.567)
Yeah, no, and I think, you know, I know one of the other areas you wanted to talk about was tech and whether, you know, the rate of tech change has been driving de -skilling and low pay. And I think the evidence, even with AI is probably, yeah, the big survey each year that the World Economic Forum do, they're predicting a net gain, I think, from AI rather than net job loss. Although, you know, if you're in one of the areas affected, the job loss, that's not to downplay the negative impact. But I think the evidence is that, yeah, the potential for folks to for that technology to upskill people and support upskilling if we use it appropriately is great. I went down to an insurance company in Wales to just have a look at how they were using.

AI in processing and most of the staff were really positive. It was doing all the grunt stuff which they didn't enjoy and it was giving them more time for the more interesting stuff which they did enjoy and that's of course more valuable to their companies and it's more valuable to them. So I think it can be a real win -win if we get it right.

Sean Luitjens (40:10.862)
Well, this has been awesome. I feel like I can always chat for a long time. I really appreciate it. We will. So thanks. Thanks for coming on, Duncan. For those listening, if we'll try to put it the outro slide, I think is the cool term I'm supposed to use. We'll put some of Duncan's information, publications, whatever links can be found there for all the smart things he does because he's way smarter than I am, which is why it was great having you on, Duncan.

Duncan Brown (40:41.087)
No, listen, thank you. No, I really feel honoured to join this list, Sean. So thank you very much for inviting me. It's really kind of you guys.

Sean Luitjens (40:50.862)
All right, man. Thanks.

Duncan Brown (40:52.287)
Cheers, good to see you.