The concept of the Low Skills Equilibrium (LSE) denotes a mutually reinforcing set of mechanisms that generate a pattern of low skills and low productivity. The idea has been a powerful one in both analytical and policy terms. There is growing emphasis on the need to study the LSE at the level of the firm. This paper does so by focusing on a sector, food manufacturing, which has been explicitly identified as representing an LSE. It then narrows the focus to small firms, which are likely to lack the resources to move to a high value-added path and which thus reflect low skills issues particularly clearly. The paper deploys data from 27 firms in the east and west Midlands of England. It addresses four issues: how is it that a low-skill sector continues to survive in a modern economy, what is the nature of the equilibrium, how far is a low-skills route determined by market forces and what does working in a lowskill job mean for autonomy and work intensification?
The key conclusion is that low-skills jobs of this kind are likely to continue to exist. They will not disappear as part of any shift towards a high-skills economy. But they are also not of a fixed character, and some firms were in principle open to new ideas: they were not locked into an unchanging equilibrium. In policy terms, an approach that is based upon increasing the supply of qualifications, or of hoping that firms of this kind will commit themselves to formal accreditation, is some way from the concrete realities of small firms. An approach needs to reflect the specific markets in which they operate and to be targeted accordingly. At firm level, public support might be made conditional on firms at least addressing skills and work organization issues. At a wider level, an approach can also build on firms’ willingness to engage in informal networks by promoting local sector-level initiatives that firms could trust. There is evidence that such bodies are welcomed and would fill a gap and potentially offer models that other sectors could emulate. But a major stimulus would need to be a restriction on the availability of cheap labour; closing of a low-wage option would require firms to focus more attention on skills than they currently do.