Award-winning think tank releases its fifth annual report on the prevalence of low pay in Britain

6 October 2014

Using statistics from 2014, The Resolution Foundation have mapped out both the scale of low pay and which groups are most affected by this.

The report also shows changes in low pay over recent decades and predicts what is to come, particularly in light of the new National Living Wage in 2016.

Some of the key findings of April 2014 include:

Against the resolution foundation’s core measure of low pay, one-in-five employees (21 per cent, or 5.5 million individuals) were low paid in Great Britain. This has changed proportionally over the last 20 years.
2 per cent of employees were affected by ‘extreme’ low pay. This number is likely to refer to young people and apprentices as well as some possible minimum wage non-compliance – taking into account that the threshold falls below the adult minimum wage.
More than one-in-five employees (22 per cent, or 5.7 million individuals) were paid less than the voluntary Living Wage. This is 2 per cent more than in 2013.
One-in-twenty employees (5 per cent, or 1.4 million individuals) were receiving minimum wage; which has steadily increased since the early 2000s.

Despite this, there were prospective figures based on the impact that the National Living Wage will have on low pay:

By 2020, the national living wage will reduce the prevalence of low pay to its lowest level since 1985, from 21 per cent in 2014 to 19 per cent. This will improve the UK’s international low pay standing when all-employee hourly pay measure is used.
The proportion of workers earning their age-specific legal minimum will rise sharply as a result of the UK’s fast-rising wage floor, from around 1 in 20 today, to 1 in 9 employees by 2020.
The proportion of workers paid below the voluntary living wage is expected to rise to 24 per cent (6.5 million employees) next year.
In addition, The NLW will have an even larger impact on the ‘depth’ of low pay, with the average low paid individual being much closer to the low pay threshold by 2020 The combination of gently declining low pay prevalence and steeper falls in the depth of low pay means that the magnitude of the ‘low pay gap’ (the total wage bill falling below the standard low pay threshold) will almost halve between 2014 and 2020. The low pay gap was £7.9 billion in 2014 and the equivalent figure for 2020 (but holding constant 2014 pay and employment levels to allow comparison) is £4.4 billion.

Among those who are most likely to be on low pay are women, part-time employees, temporary employees, those in lower-skilled jobs and those who work in hospitality retail and care. Self-employed employees are also said to be low paid but were not included in the analysis.