City leaders must rise to Britain’s low pay challenge

Greater Manchester’s devolved powers mean it is uniquely placed to tackle the low pay challenges faced by Britain’s major cities, according to a new report published today (Sunday) by the Resolution Foundation.

The report Low Pay in Greater Manchester, which will be published as part of the Greater Manchester Independent Prosperity Review on Tuesday, shows that around one-in-five employees (19 per cent) across Greater Manchester (GM) are low paid. This is comparable to other city regions such as Cardiff (19 per cent) and West Yorkshire (20 per cent), and below the levels in the Sheffield City-region and Tees Valley, where almost one in four workers are low paid (24 per cent). London has the lowest share of low-paid workers (10 per cent).

The report finds that Greater Manchester shares many core low pay problems with many other major cities, including:

• Relatively few firms dominating low pay. Five employers account for 11 per cent of all low-paid employees across the area. The Foundation says that this risks leaving staff a lack of choice about where to work, leading to weaker wage bargaining power.
• Retail and hospitality accounting for half of all low-paid jobs. Retail and wholesale accounts for 27 per cent of the area’s low-paid employees, while a further 21 per cent work in hospitality, tourism and sport. Any low pay strategy therefore needs to focus on these sectors.
• Limited routes out of low pay. When looking at low paid workers across the area, over one-third (35 per cent) were still in low-paid roles four years later. This is a higher proportion than in London (29 per cent) but lower than in the ‘stickiest’ region (Newcastle, where the figure is 43 per cent). Those who had moved out of low pay were concentrated in certain types of jobs, with teaching assistant and nursing auxiliary jobs more common among those who had progressed to higher pay.

The Foundation notes that the devolved powers given to Greater Manchester mean that it has the opportunity to put tackling these challenges at the centre of its economic policy. Doing so would involve the city region’s direct control of health and social care, its role in jobs initiatives like the Working Well pilot (which provides support to people with health problems looking to work), and the ability to convene sector-based discussions on how progression routes can be built within low-paid sectors.

The report notes too that Greater Manchester faces specific low-pay challenges of its own, including:

• Low pay among some disadvantaged groups. Two in five single parents (41 per cent) are low paid, far higher than the national figure of 33 per cent, and around one-in-three black workers are low paid (compared to the GB-wide figures of 21 per cent).
• A centre-periphery split. One-in-four workers in outlying areas, such as Rochdale and Wigan, are low-paid, compared to just one-in-seven in Trafford and central Manchester.
• A social care worker crisis. Health and social care workers in Greater Manchester are significantly more likely to be low-paid compared to Great Britain as a whole (19 per cent, compared to 10 per cent).

The Foundation says that these unique challenges highlight the importance of understanding the local labour market when drafting a low pay strategy.

Fahmida Rahman, Researcher at the Resolution Foundation, said:

“Policies like the National Living Wage have transformed Britain’s low pay landscape. However, low pay remains a major issue across many of Britain’s city regions, with 220,000 low paid workers in Greater Manchester alone.

“Low pay is concentrated among a few key sectors such as retail and hospitality, and sometimes among a few large employers. Meanwhile far too few low-paid workers progress onto higher-paid roles.

“Our city regions are at the centre of low pay in modern Britain. The spread of devolution means our city leaders now have the opportunity to put tackling low pay at the centre of their economic strategies. Given the unique powers Greater Manchester has to tackle low pay, policy makers across the UK will be watching to see if a city-led approach to the problem can work.”

Greater Manchester’s lead for Economy, Sir Richard Leese, said:

“We know we’ve already got some world-class strengths that we absolutely must play to when using our devolved powers to increase opportunity across the city-region.

“However, we must also recognise that over decades we have seen a rise in lower productivity sectors and lower skilled jobs and we’ll be working hard to address those issues, to reduce social disparities and boost wages.

We want to make Greater Manchester a place of prosperity for everybody, offering fair wages for a good days work – and I’m confident that in the coming years we will be able to achieve this.”