Number Of Low-Paid Workers Hits Record High Of Over Five Million

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The proportion of employees in low-paid work across Britain increased from 21 to 22 per cent last year – to just over five million people – a Resolution Foundation report revealed this week.

Resolution Foundation’s report, Low Pay Britain 2014, found that the number of people earning less than two-thirds of median hourly pay – equivalent to £7.69 an hour – rose to 5.2 million, an increase of 250,000 on the previous year.

The increase in low pay partly reflects the rapid growth in the jobs market, say Resolution Foundation, with the number of employees rising by around 340,000 between April 2012 and April 2013. But the research also shows that the proportion of employees earning less than £7.69 an hour rose slightly, reversing a small improvement in the previous year.

Resolution Foundation says ‘the report send a challenge to employers, government and all political parties to prevent people getting stuck in low pay and help them to move out of in-work poverty’.

The report also highlights that:

  • The ‘stickiness’ of low paid work is a serious problem. Almost one in four minimum wage employees who have been in work over the last five years have been stuck on the minimum rate for the entire time.
  • Women are still far more likely to be low-paid than men. More than one-in-four (27 per cent) female employees earned less than £7.69 an hour last year, compared with 17 per cent of men. This gap has slowly but steadily narrowed over the last three decades. Back in 1983, one-in-three (33 per cent) women were low paid, compared with 8 per cent of men. However, the steady decline in the proportion of women in low paid work halted last year (rising by one percentage point).
  • The UK has among the highest proportion of full-time low-paid workers across the OECD. Although the proportion remains higher in the US, employees in Britain are likelier to be low paid than those in other broadly comparable economies like Germany or Australia; twice as likely to be low-paid as workers in Switzerland; and four times as likely as those in Belgium.

Matthew Whittaker, Chief Economist at the Resolution Foundation, said:

“While recent months have brought much welcome news on the number of people moving into employment, the squeeze on real earnings continues. While low pay is likely to be better than no pay at all, it’s troubling that the number of low-paid workers across Britain reached a record high last year.

“Being low paid – and getting stuck there for years on end – creates not only immediate financial pressures, but can permanently affect people’s career prospects. A growing rump of low-paid jobs also presents a financial headache for the government because it fails to boost the tax take and raises the benefits bill for working people.

“All political parties have expressed an ambition to tackle low pay. Yet the proportion of low-paid workers has barely moved in the last 20 years. A focus on raising the minimum wage can certainly help the very lowest paid workers in Britain, but we need a broader low pay strategy in order to lift larger numbers out of working poverty.

“Economic growth alone won’t solve our low pay problem. We need to look more closely at the kind of jobs being created, the industries that are growing and the ability of people to move from one job or sector to the other, if we’re really going to get to grips with low pay in Britain today.”

Source: Resolution Foundation
Source: Resolution Foundation

Responding to the report, Labour’s Shadow Treasury Minister Catherine McKinnell MP said:

“These figures show that too many people are in low-paid jobs under this Government. Working people are over £1600 a year worse off since the last election which is why most people are still not feeling the recovery.

“Labour’s economic plan will create more good jobs and make work pay. We will raise the minimum wage to £8 an hour by 2020 and give businesses tax incentives to pay the living wage. We will also boost vocational education and apprenticeships, expand free childcare for working parents and introduce a lower 10p starting rate of tax.

“In contrast, the Tories only stand up for a privileged few. They want to cut tax credits again for millions of working families while keeping a £3 billion a year tax cut for the top one per cent.”

TUC General Secretary Frances O’Grady added:

“Last weekend 90,000 joined our march to call for a pay rise for workers across Britain and this report shows why.

“Many of the jobs created since the crash are very much of the low-paid, casual and zero hours variety. This risks many people and their families simply being left behind, unable to share in any benefit from the economic recovery – while those at the top take an increasing share of the nation’s wealth.

“What’s more, once in a low-paid job, it can be hard, if not nigh on impossible to get higher paid work. Without a new approach it’s quite likely that the overwhelming majority of the five million workers currently in low-paid work will still be stuck there a decade from now.”

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