Low Pay Britain 2012

29 September 2012

One in five British workers – just over five million employees – are low-paid as the national minimum wage falls in real terms for the third consecutive year. Low Pay Britain 2012 shows that the nation’s share of low-paid work has grown steadily over the past 30 years to 21 per cent – one of the highest rates in the developed world.

Key findings

Britain continues to stand out among comparable advanced economies as having a particularly large share (21 per cent) of workers that are low paid.
The share of low-paid work in the British labour market has grown steadily over the past three decades. This reflects, in part, the steadily rising inequality experienced by much of the developed world in the final quarter of the 20th century but policy choices have also contributed to the trend.
Low pay among women reduced sharply in the early 1970s (a fall in over 15 per cent in fewer than ten years) but these gains were partially eroded in the years that followed. In contrast, low-paid work among men has risen steadily since the late 1970s (from 10 per cent of all male workers in 1968 to 16 per cent in 2011) albeit from a far lower starting point than for female workers.

Workers who are female, part-time, on temporary or casual contracts and who work in the private sector are at greater risk of finding themselves in low-paid work.
Young workers (aged between 16 and 20) are at high risk of low pay. This is partly explained by the traditional trajectory of earnings over the life course but has been exacerbated by recent developments including an explosion in student employment over the last two decades.
A significant minority of workers remain trapped in low-paid work over the course of their lives. For example, around 1 in 7 of those aged between 31 and 50 – a time when many can expect to be at their ‘peak earnings’ – are low paid.
London is distinct from other regions in having more workers earning below a living wage (16 per cent) than below the low pay threshold (12 per cent). This reflects the fact that living wage rates are derived, in part, from an absolute calculation of the basic needs of the recipient – needs which are greater in the capital as a result of higher living costs.
While part-time work is associated with a higher risk of low pay, a significant share of all low-paid work is full-time (43 per cent).
The overwhelming proportion of low-paid workers (87 per cent) are in permanent, as opposed to temporary or causal, employment.
Low-paid work can be found in every occupation but is concentred in relatively low-skilled occupational groups such as Elementary Occupations (cleaners, security guards, catering assistants, leisure workers) and Sales & Customer services.
Low-paid work is found in every industrial sector but the risk of low-paid work is particularly acute in the Hotels & Restaurants sector where 2 in every 3 workers are low-paid.

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