Tests on the European Socio-Economic Classification

TESTS ON THE EUROPEAN SOCIO-ECONOMIC CLASSIFICATION

TECHNICAL FINAL REPORT - ITALY

Agreement number 32100.2007.001-2007.692

Contents

1. Introduction
2. The simple version of ESeC in the Italian context
3. The role of the variable ‘supervisory responsibility’
4. The ESeC classes and social prestige
5. The skill profile of the ESeC Groups
6. ESeC_simple e ESeC complex
7. The unemployed and inactive dimensions
8. Final remarks: the improvement of data quality on occupations for the sake of comparative analysis

1. Introduction

The object of this report is to analyse and assess the current prototype of the European Socio-Economic Classification (ESeC) in the Italian context.

The importance to have a harmonised socio economic classification in order to better describe, categorise and compare internationally socio economic groups has been greatly recognised by the DSS. A harmonized European classification could in fact provide a common language for improving the integration of social statistics within the Community.

A socio-economic classification needs to group together individuals with similar economic, social and cultural characteristics, comparable lifestyles and patterns of behaviour. Individuals in similar socio-economic situations occupy as a consequence common positions in the social structure. They possess similar resources as a result of their socio-economic positions and thus similar possibilities and constraints in terms of opportunities, behaviour and ‘life chances’ – for example in relation to educational attainment, health, material rewards and social mobility.

A socio-economic classification should improve the presentation of social statistics to allow comparisons and contrast analysis for most social domains, i.e. income distribution, living conditions and social exclusion, consumption behaviour, social behaviour, fertility, mortality and health.

The ESeC classification was developed bearing in mind the key principles of relevance, simplicity, ease of implementation, feasibility, avoidance of burden, output harmonisation, use of tested definition and international comparability.

The choice to largely base the classification on the description of the world of work, without taking into account other explanatory factors of “social positions”, like economic, cultural, social capital, etc. makes the ESeC easy to implement at EU level since it doesn’t require additional data than the ones collected with the Labour force survey.

The theoretical approach used to develop ESeC follows the Erikson-Goldthorpe-Portocarero (EGP) schema, which sees individuals as occupying a limited number of common positions in the social structure in terms of social power. Those who share similar resources, and thus similar structural positions, will share similar possibilities and constraints in terms of ‘life-chances’. Therefore, they presumably may act in similar ways.In this approach, the structural base of social power provides ‘a link between the organisation of society and the position and behaviour of individuals’ (Breen & Rottman 1995). While there are many bases of social power – age, gender, social status – it is generally agreed among sociologists that the most important in modern market-economy societies is that of social class, i.e social power based on market or economic power.

ESeC aims to differentiate positions within labour market and production units in terms of their typical employment relations.

The EGP approach to class analysis (Erikson and Goldthorpe, 1992; Goldthorpe 2000) first distinguishes four basic social positions, those of employers, the self-employed, the employeesand those involuntary excluded from the labour market.

Employers are then further distinguished in terms of the number of employees in their establishments (i.e ‘large’ and ‘small’ employers). Similarly, employees are differentiated in terms of the nature of their employment relations as determined by their employment contracts. Three types of contract are identified, the service relationship, the labor contract and mixes of these two. The service relationship is typical of managerial and professional employment. It involves not only rewards for work done but also prospective elements, e.g favourable pension arrangements and similar perquisites and greater career opportunities and job security. The labour contract is a more specific exchange of money for effort and is typically found in manual (and increasingly in very routine non-manual in sales and services) work. Intermediate employees (e.g clerical workers) typically have a combination of elements of both basic contractual forms (see Table 1 for the 10 ESeC classes with the related employment regulation)

Two methods to derive ESeC have been developed, the choice depending on theinformation available about employment status:

the simplified method, when only occupational data coded to ISCO minor group (3 digit) are available;

the full method, that achieves the best quality derivation, when data on occupation (Isco minor group) on employment status and on the size oforganisation are available.

The basis for the ESeC classification is thus occupation,classified according to Isco, as it is recognised that the type of work performed can have a great influence on the living conditions of the individual and household.

Hence, social stratification and social mobility literature usually pay attention to the type of job as a central element in studies of inequalities of opportunities and results and their reproduction over life cycles and generations.

In this report we consider the Labour Force Survey to testthe European Socio-economic classification prototype in Italyas it make available all the variables required both for the full and the simplified version of ESeC.

More precisely, as far as the occupation(main job) of people employed during the reference period is concerned, the Italian LFS questionnairecollects, with the following questions, information for coding to national classifications and to ISCO4th digit:

Question 1 - Occupation title current or last main job

"What is your (main) job?"

(Open)

Question 2 - Occupation description current or last main job

"What do you mainly do in your job?"

(Open)

As far as the Status in employment is concerned the following answers are considered:

- Employee

- Parasubordinate

- Employer with employees

- Self employed without employees,

- member of cooperatives,

- family worker

The number of employees is asked to all the employed with the exception of the Self employed without employees and the para-subordinate workers.

Supervisory responsibilities.The LFS question is intended to collect information on the formal supervision task of work of other person, the question being "In your job, do you have any formal responsibility for supervising the work of other employees?"

For the purpose of testing the ESeC – the User Guide and the syntax file proposed by the Institute for Social and Economic Research were used ( The syntax file was adapted to the national LFS variables.

In paragraph 2 we start on analysing the Italian distribution of the ESeC groups derived with the simplified method (from now on the ESeC simple groups)

The role of the variable ‘supervisory responsibility’ is discussed in paragraph 3, where data on other dimensions of the concept are presented.

The aim of paragraph 4 and 5 is to test the explanatory power of the ESeC group. More precisely, in paragraph 4 an analysis of the social prestige of the nineESeC classes is performed on data coming from the Italian survey on occupation; in paragraph 5 the skill profile of the ESeC classes is presented and discussed.

Paragraph 6 compares the two distributions of ESeC derived with the simplified and the full methods and some remarks are put forward. In Paragraph 7 the unemployed and inactive class is considered. Finally, paragraph 8 stresses the point on the qualityissues as quality improvement on the ESeC dimensions would become essential to allow reliable comparative analysis.

1. The simple version of ESeC in the Italian context

The milestone in defining the socio-economic classes of ESeC is the occupation performed by an individual, classified according to Isco.

Indeed, ISCO is primarily a job classification and it takes only marginal account of the social status of employment. The latter dimension must therefore be plugged into the analysis separately crossing ISCO with some additional variables of employment status. And this is intended to be the aim of the ‘full version’ of ESeC.

Instead, the simplified version of ESeC takes ISCO minor group variable and simply allocates people to classes on the basis of occupational information.

Table 2 shows for the year 2008 the cross tabulation of people employed by Isco and ESeC major groups.

Table 2- The Isco and the ESeC groups (simple version) 2008(row percentage)

Moving from Isco to ESeC-simple the main changes refer to

Isco major group 3 ‘Technicians and associate professionals’ which splits mainly into the Intermediate occupations (50,35%) and Lower mgrs/professionals, higher supervisory/technicians (46,54%);

 Isco major group 4 ‘Clerks’ which feeds ESeC classes 3 ‘Intermediate occupations’ (54,24%) and 7 ‘Lower sales and service‘ (38,89%);

Isco major group 2 ‘Professionals’ which makes up ESeC classes 1 Large employers, higher mgrs/professionals (61,64%) and 2 ‘Lower mgrs/professionals, higher supervisory/technicians’ (38.36%)

To sum up, the distribution of the employed by ESeC classes puts evidence on some specific characteristics of the Italian labour market.

In particular:

• The high concentration of the first Isco major group within the ESeC class of ‘small employers’ shows the peculiar characteristic of the Italian Labour market, that is the high presence of small enterprises;
• As far as the knowledge workers (Isco 2nd class) are concerned, they are mostly classified into the ESeC class of Higher mgrs/professionals rather than into the class of Lower mgrs/professionals, showing a particular high skill level of these occupations.
• Also the skill level of the Technicians (3rd Isco class) is high as it is testified by the high percentage of these occupations inside the ESeC class of Higher supervisory/technicians rather than the class of Intermediate occupations.
• As far as the manual occupations are concerned, table 2 shows us that most of the working-class occupations are low skilled; both the Plant and machine operators and the Elementary occupationsand the Craft and related trades workers,are highly concentrated in the ESeC classes of Lower tecnicaland Routine occupations.

Figure 1 puts some light on the distribution of the ESeCand the Isco groups. Each ESeC class contains a substantial proportion of the population, even though the distribution is quite uneven, varying from a share of 20.93% for Routine occupations to only 0.97% for Lower supervisors and technicians.

Anyway this result has already been pointed out by other countries.

Figure 1 - Distribution of the population (15-64) into ESeC(simple version) and Isco classes 2008

ESeC

Isco

If we look at Figure2, the ESeC groups are very well characterized as far as the professional status is concerned. In fact, with the exception of the class of the ‘Large employers, higher mgrs/professionals’,all the ESeC classes have a very high percentage - higher than 71,3%- of employed or self-employed people.

Figure2-ESeC groups and professional status 2008

3.The role of the variable ‘supervisory responsibility’

One important element in the operational definition of ESeC is the supervisory status. It is used to allocate workers who otherwise are coded as ESeC 3, 7, 8 or 9 into ESeC 2 or 6.

The concept of supervisory status is far from being exactly bounded. Positions of supervisors are seen as somewhere between managers and ordinary employees. If we try to define the variable in a formal and strict way, a person is considered to have supervisory responsibilities when he/she formally supervise the work of at least one other person, takes charge of the work of other employees, directs their work and controls that it is satisfactorily carried out.

Several implementation rules of this definition can follow, like for instance:

• Supervisory responsibility includes formal responsibility for directing other employees (other than apprentices), whom they supervise directly, sometimes doing some of the work they supervise and excludes quality control (check output of services but not the work produced by other persons) and consultancy.
• It should be considered the usual situation and not the situation only during the reference week.
• Sometimes job titles can be misleading. For example, a ‘playground supervisor’ supervises children not employees and so should be coded 2. Similarly, a ‘store manager’ may be a storekeeper and not a supervisor of employees.
• In some cases the person is cumulating supervising responsibilities with other functions; even if the supervising responsibilities only constitute a part of their job, they should be coded 1.
• Persons having supervisory responsibilities only because they are temporarily replacing an absent superior should not be considered as having supervisory responsibilities. The definition of temporarily here is left to the respondent.
• Members of groups with collective responsibility (groups where there is a rotating leadership in a continuous way taking charge of the work of other employees, directing their work and seeing that is satisfactorily carried out) should be considered as having supervisory responsibilities.

In the 2008 Labour Force Survey, the question about the supervisory functions states “In your job, do you have any formal responsibility for supervising the work of other employees?"

Table 3 presents the distribution of the answers to this question by the ESeC groups.

The results are quite similar over the last five years. In particular, in the last three years, the groups with the higher percentage of positive answers are (in order):

4. Small employers and self-employed (non-agriculture);

1. Large employers, higher mgrs/professionals;

2. Lower mgrs/professionals, higher supervisory/technicians;

6. Lower supervisors and technicians;

3. Intermediate occupations.

As expected, the occupationsthatsupervise the work of other workers are concentrated in the employers, in the supervisors and in the intermediate occupations.

The problem is to verify if the variable on "supervisory functions", as defined in the 2008 LFS, is useful enough for the right allocation of certain occupations in ESeCcomplex groups. A qualitative

Table 3- “In your job, do you have any formal responsibility for supervising the work of other employees?" LFS 2004-2008

and quantitative description of occupations concerned should be provided in order to evaluate the risks of misclassifications with or without the dimension "supervisory functions".

Results of a survey recently carried out by Istat (the sample survey on occupations - 2007) could answer to our question, helping us to assess whether ESeC criteria comply with the peculiar characteristics of the Italian occupations stemming from statistical surveys. Actually, the aim of the sample survey on occupation, funded by the Ministry of Labour in order to build a permanent observational system of the occupational needs, is to describe jobs, to measure the human capital required to adequately perform job tasks and to gather information on the work context.

The theoretical model which the survey refers to comes from the U.S. department of Labour experience (Peterson et al., 1999). It gives the opportunity to adequately describe jobs from a number of different perspectives, with a particular emphasis to the characteristics and requirements of both the worker and the work.

The cross-occupation descriptors of the questionnaire provide a basis for measuring the similarities and differences observed among occupations.

The most important sections of the questionnaire –i.e. the section devoted to knowledge, skill, ability and generalized work activities - use the same frame of measurement. For each item (i.e for each knowledge, skill, abilityor generalized work activities) the incumbent is asked to answer a double question: “how important is the item to the performance on his current job?” and, if the rate is at least somewhat important, “what level of the item is needed to perform his current job?”

The aim of this type of question is to rate two complementary aspects: on the one hand the impact of every item on the working performance and on the other the level of mastery required to carry out the job.

To answer the first aspect of the question the incumbent makes use of a rating scale from 1 to 5 (1 indicating that the descriptor is not important, 5 indicating that the descriptor is of absolute importance). The second aspect is measured through a 7 point rating scale (1= a very low level of the item is required; 7= a very high level of the item is required).

To help the incumbent to appropriately rate, the level scale includes descriptions of activities requiring high, medium and low levels of the item. The examples proposals in the lower points of the scale are drawn from daily activities, while those proposals in the higher scores send back to complex activities.

The workers’ answers are used to obtain an occupational unit mean profile quantifying, with values in a range between 0 and 100, the importance of more than 200 descriptors to perform the work activities of each of the 804 occupational units. The following tablesummarises all the contents of the survey questionnaire.

Coming back to the supervisory dimension, Table 4shows a sketch of the survey results with reference to three descriptors of generalised work activities, which can be linked to the variable ‘supervisory responsibility’ used by ESeC classification in order to classify workers in different groups.