Why more social mobility means more productivity – and more growth

A new study shows greater social mobility at work could greatly improve productivity, as well as the economy in general. Sarah Atkinson explains why it’s about time employers and HR professionals did something about it.

Few would argue that £19 billion is the kind of boost our economy desperately needs. And it’s the estimated increase to the UK’s annual GDP from promoting greater social mobility in our workplaces, according to recent research from Demos and Co-op. HR professionals should sit up and take notice: many of the report’s suggested interventions fall squarely at their doorstep, from more equitable hiring and promotion to fostering an inclusive workplace culture. 

There’s a well-established link between economies with greater social mobility and higher productivity, due to better matching between jobs and people across society and fewer barriers to realising potential. And the same is true for businesses: those focusing on social mobility have profits that are 1.4 times higher than their competitors, research by Accenture has found.

Not only is there a strong moral case and growing consumer expectation that businesses should be drivers of positive social change; removing barriers to entry brings benefits including a wider talent pool, greater diversity of thought and improved customer understanding. 

Data and guidance

Unsurprisingly, more and more businesses are addressing socioeconomic disadvantage in their hiring, progression and workplace cultures. Our annual Social Mobility Employer Index is the leading authority on workplace social mobility, where leaders in the field are benchmarked and advised on how to improve. This year’s top employers – law firm Browne Jacobson and professional services giant PwC – are demonstrating what is possible with the help of the Index’s expert guidance. And among the 150 employers that entered – including the likes of Co-op, Amazon, Aviva and Santander – we can see efforts to break down barriers to opportunity running deeper and wider than ever before. 

Collecting socioeconomic data is fast becoming the norm. Employers are recognising the importance of widening their talent pools and improving access for underrepresented groups, especially at a time of skills shortages and increased social scrutiny for businesses. The key measure is a single question about the main household earner’s job when someone was 14, which can easily be added to diversity surveys. You can also include extra questions about the type of school attended, whether they received free school meals and if their parents went to university to get a clearer picture. Almost three-quarters of Index entrants now collect three or four socioeconomic data points for their employees, and report good response rates to questionnaires. The Solicitors Regulation Authority has made collecting and reporting this data mandatory for regulated legal firms, and we hope that other sector regulators will soon follow suit. 

Publishing gaps

Many employers are going further, by measuring and publishing their socioeconomic pay gaps. More than one in six (26) employers of the 150 that entered the Index are now collecting this data, and 19 employers publish it alongside their gender pay gaps, including Co-op, PwC and Teach First. By doing so, they are demonstrating leadership, holding themselves accountable and setting the direction of travel for other firms to follow suit. 

This year also saw improved action in two sectors that are highly unrepresentative of the customer base they serve: the tech and creative sectors. Just 26% of those working in creative industries come from lower socioeconomic backgrounds, versus 39% of the UK working population, and in areas such as film, television and radio, this can drop as low as 8%. In tech, just 9% come from lower socioeconomic backgrounds, despite the sector’s huge resources and increasing influence right across society. So it was promising to see tech entrants to the Index increase by 60%, and creative entrants increase 43% this year. They follow in the footsteps of other industries that have identified issues of elitism and begun to act to address them, such as finance and law, whose industry initiatives and Index participation are strong. We look forward to welcoming more employers from these sectors next year. 

The UK’s position

While these are positive steps, the barriers facing people from lower socioeconomic backgrounds remain significant. The UK has lower social mobility than almost all other major European economies, and our research has found that professionals from working-class backgrounds are paid an average of £6,287 – or 12% – less per year than their more privileged counterparts in the same occupations. 

The new government has rightly identified improving opportunity for this group as key for growth, committing to “make sure there is no class ceiling on the ambitions of young people in Britain”. And they are following up with action, with plans to enact the socioeconomic duty in the Equality Act, which will mean public bodies must address inequalities that result from socioeconomic status. This is likely to have knock-on effects for the organisations in the private sector, especially those that do business with government bodies, with a possible competitive advantage for those already acting to address socioeconomic barriers. As businesses prepare for the introduction of ethnicity and disability pay gap reporting as part of the upcoming Equality (Race and Disability) Bill, it would be worth adding socioeconomic background to diversity surveys and action plans. 

In the face of change from government, regulation and competitors, now is the time for organisations without a social mobility plan to get moving. Beginning to collect data in their organisations and signing up the Index are perfect first steps. The majority of those who enter have now made important changes, like paying travel costs for work experience, ringfencing some internship opportunities for those from lower socioeconomic backgrounds, starting social mobility networks and so much more. They have set the bar – now it’s time for other employers to leap over it. 

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