Low pay has stopped falling for the first time in 15 years

The share of workers in low pay failed to fall the first time in 15 years, and in fact rose slightly on last year, the Resolution Foundation said today (Thursday) in response to the ONS Annual Survey of Hours and Earnings (ASHE).

ASHE is a large ONS survey of businesses and provides valuable detail on earnings and hours worked among UK employees.

Today’s data shows the proportion of employees earning less than two-thirds of median hourly pay – a standard measure of low pay – was at 2.8 per cent in April 2026, up slightly on last year’s figure of 2.6 per cent. Low pay has stopped falling due to recent governments increasing the minimum wage in line with median earnings. Although little has changed in the past year, the rate is much lower than a decade ago, when one-in-five employees across the UK were low paid.

The ASHE data is an important input to the Low Pay Commission’s (LPC) minimum wage setting process. The LPC has been given a remit by the government to use two-thirds of median hourly pay as a key reference point.

Back in April, the LPC’s central estimate of the 2027 minimum wage needed to stay at two-thirds of median earnings was £13.18. That estimate was made based on the earnings data available at the time, which showed average earnings growing at 3.8 per cent in the year to January 2026. But according to today’s ASHE data, median hourly pay grew 5.9 per cent in the year to April 2026.

This implies a substantially higher minimum wage would be needed next year to keep it pegged to two-thirds of median hourly pay – closer to £13.40. However, the LPC’s remit gives it more wiggle room than they previously had when it comes to setting the minimum wage, so they may choose a different increase than implied by the new ASHE data published today.

Today’s data also shows that decades of progress on closing the gender pay gap (measured in terms of hourly pay) has continued. Among full-time employees, the gap fell from 13.0 per cent to 12.3 per cent among all workers, and from 7.2 per cent to 6.8 per cent among full-time workers. Less positively, however, the gap among top earners (at the 90^th percentile) is higher, and has been growing in recent years, from 14.9 per cent in 2023 to 17.3 per cent in 2026, among full-time workers.

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

“Low hourly pay in the UK has stopped falling for the first time in over a decade. This is the result of the minimum wage moving to a ‘hold steady’ phase after years of being ramped up. It remains the case however that the share of workers on low pay is vastly lower than it was a decade ago.

“Today’s data may have implications for next year’s minimum wage. With hourly pay growth surprising on the upside, the minimum wage next year may be significantly higher than the forecast of £13.18 published by the LBC back in April. However, the LPC now have more wiggle room on setting minimum wage rates, so the final number will come down to their judgement.”