Since 2011, the Resolution Foundation has published an annual review. This year’s report – the eighth edition of Low Pay Britain, based on pay data from April 2017 – documents the headline trends shaping the low-paid end of the labour market today and highlights the new challenges policymakers should be addressing.
The report identifies three key challenges that those concerned with low pay should be getting to grips with:
- Progression: While ‘shop floor to top floor’ stories are often highlighted for sales assistants in retail, the report finds that just 4 per cent of sales assistants had moved on and up to become supervisors or managers in the same sector five years later. Only one in ten managers had been sales assistants five years earlier.
- Power: When a small number of firms dominate in a sector or area, this can lead to lower wages or worse terms and conditions as employees have little choice over who to work for. This problem is most acute for low paid workers in the UK. Though comprising a tiny proportion of all firms, companies with 5,000 or more workers employ 28 per cent of all low-paid people. Nearly one in six (16 per cent) low-paid employees work for just 20 firms, a much higher proportion than for high-paid employees (9 per cent).
- Gender pay gap: 22 per cent of women are low-paid, compared to 14 per cent of men. Women are less likely to progress out of low pay, are more likely to switch into other low-paying jobs when they do move, and are more concentrated in a handful of large firms than low-paid men.
- The National Living Wage led to another drop in low pay in 2017, with 18 per cent of employees earning less than two-thirds of the median hourly wage, equivalent to 4.9 million people.
- This pattern of declining numbers in low pay is set to continue up to 2020. But even at that point, when the National Living Wage is fully implemented, approximately 4 million people will still be low-
- More than one in five workers (23 per cent) were paid less than the voluntary Living Wage in 2017, with 7 per cent of employees paid at the wage floor.