Share of low paid workers across Britain has fallen to a fresh record low

Britain has continued to make progress on reducing the gender pay gap and the incidence of low pay in the past year, though overall pay growth has slowed in recent months, the Resolution Foundation said today (Thursday) in response to the ONS Annual Survey of Hours and Earnings (ASHE).

The ASHE data, which was collected in April 2025, provides a unique insight into the how earnings – the most important driver of living standards – are distributed across Britain.

Decades of progress on closing the gender pay gap (measured in terms of hourly pay among full-time employees) continued last year, falling from 7.1 to 6.9 per cent. The labour market today has been transformed since the early 1970s, before the Equal Pay Act took effect in December 1975, when women working full time earned 36 per cent less per hour than men.

Decades of progress on reducing low pay has also continued, with the proportion of employees earning less than two-thirds of median hourly pay falling from 3.1 to 2.5 per cent. As recently as 2015, one-in-five employees across Britain were low paid.

Strong pay growth for low earners, driven by big increases in the National Living Wage (NLW), has reduced pay inequality (the ratio of hourly wages at the 10^th and 90^th percentile) to 3.0, down from 4.0 in 1998.

Overall, typical hourly pay rose by a healthy 5.0 per cent in cash terms, and by 1.5 per cent in real terms. The Foundation cautions however that more recent pay data indicate a slowing of pay growth, with average weekly earnings growing by just £1.50 over the past 11 months – barely enough to cover the cost of a Gregg’s sausage roll.

The size of hourly pay growth in the latest data is in line with the Low Pay Commission’s expectations and should mean that their provisional estimate of the NLW rising by 4.1 per cent to around £12.71 next April holds. Last year, data revisions drove a higher than expected increase in the NLW – delivering a shock to firms also having to contend with a big increase in employer National Insurance at the same time.

Nye Cominetti, Principal Economist at the Resolution Foundation, said:

“While Britain has struggled to secure strong and sustainable pay growth in recent decades, it has made progress on how pay is distributed across society.

“The gender pay gap has fallen below seven per cent for the first time – it was five times bigger in the early 1970s – while the share of low paid employees has fallen to a record low.

“Restoring productivity-based pay growth, while continuing to make progress on the gender pay gap and low pay would help to ensure that the benefits economic growth are felt throughout society.”