Is working enough to escape poverty? Evidence on low-paid workers in Italy

We investigate the dynamics of incidence, intensity and persistence of low pay in Italy from 1990 to 2018 by exploiting a large administrative sample of employees in the private sector. We refer to relative and absolute low pay thresholds and assess workers’ conditions according to annual earnings, weekly wages and full-time-equivalent (FTE) weekly wages, to depurate low pay dynamics from the influence of changes in worked weeks and hours. Regardless of the chosen threshold, we find that the incidence of low pay is high and steeply increased in the last decades when the focus is on annual earnings and weekly wages. A flat trend emerges instead when low pay is assessed according to FTE weekly wages, signalling that a major role in the low pay dynamics is played by the reduction in the number of hours worked by low-paid individuals because of the increasing spread of part-time contracts. Nevertheless, the share of low-paid workers is rather high even when the focus is on FTE weekly wages. Furthermore, low pay is a persistent status for a large and rising share of workers. These findings reveal a clear worsening of workers’ conditions at the bottom of the earnings distribution in Italy.