Wellbeing & Benefits

The proportion of low-paid workers in Britain has fallen to its lowest level since 1980, a think tank has said, with young adults particularly benefitting.

The number of low-paid workers dropped by 200,000 last year, with 120,000 of them aged between 21 and 30, the Resolution Foundation said. It said the introduction of the National Living Wage had ‘significantly’ reduced low pay.

It could be eliminated altogether by the mid-2020s, research suggested.

“The chancellor and the Labour Party have both announced ambitious plans for its future, either of which would result in the UK having one of the highest minimum wage rates in the world,” the report said.

The charity the Living Wage Foundation says the wage level needed to ‘meet the costs of living’ is £9 an hour across the UK and £10.55 an hour in London.

Low pay is considered to be hourly pay below two-thirds of the median average across the country. This is the equivalent of £8.52 an hour.

The National Living Wage is lower than this, but the Resolution Foundation said the NLW had a beneficial knock-on effect to other low-paid workers.

The Foundation said that, in 2018, there were 4.7 million employees on low pay, 17.2% of the total. This was the lowest proportion since 1980, and the lowest number since 1997.

“Clearly, the UK still has a significant low pay problem, but it is a problem that is getting smaller after many years of stubbornly refusing to do so,” the report said.

Some 2.8 million (60%) of the 4.7 million low-paid employees in 2018 were women. Owing to the fact they were more likely to be low-paid than men, they saw a greater benefit from the shift to better pay. The number of low-paid women fell by 133,000 between 2017 and 2018.

The biggest falls (110,000) in terms of the type of job were said to have taken place in administrative and support services, and the retail sector.

The think tank said raising the living wage to a level which would end low pay, by setting it at two-thirds of median hourly earnings for workers aged 25 and over, would represent a further ‘huge change’ to the labour market.

“An ambitious, but cautious, approach that saw the National Living Wage (NLW) continue to rise after 2020, at a faster pace than the minimum wage has increased over its 20-year history would put Britain on course to eliminate low pay in the middle of the 2020s, while still giving the government room for manoeuvre if economic conditions change,” said the report’s author Nye Cominetti.

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