The UK pay gap – how top earners surge ahead of the rest

New analysis released by the Resolution Foundation today (Monday 15 April) reveals how many hours ordinary workers would have to put in to earn the same as the highest-paid people in the country – and how far minimum wage workers lag behind.

It shows that the pay of the top one per cent of full-time earners in Britain starts at almost £60 an hour, so they take home at least £123,400 a year for a 40-hour week. This compares to:

• £26.56 an hour for a full-time worker 90 pent of the way up the earnings scale
• £17.25 an hour for a full-time worker 70 per cent of the way up the earnings scale
• £12.76 an hour for a full-time worker halfway up the earnings scale (the median)
• £6.19 an hour for a full-time worker on the minimum wage

This means that the worker at 90 per cent on the scale would need to work for 89 of the 168 hours in a week to match the pay of the top one per cent. Someone at 70 per cent on the scale would need to work for 138 hours a week. The median worker would need to toil for (an impossible) 186 hours a week. And someone paid the minimum wage would need to work for an extraordinary (and impossible) 383 hours a week to get there.

Put another way, a minimum wage worker would have to do 24 hours a day for 830 days – more than two years – in order to match the annual earnings of someone in the top one per cent.

The Resolution Foundation, an independent think-tank, revealed the startling figures to coincide with a public debate it is holding today on the gap between high pay and low pay. The event, featuring Vince Cable, the Secretary of State for Business and Frances O’Grady, General Secretary of the TUC, is jointly organised with the High Pay Centre and takes place at the Institute of Directors.

One in five British workers, more than five million people, are low paid and the share of the working population who are low paid has increased steadily over the past 30 years. Low pay is particularly common for people working as cleaners, security guards, catering assistants, leisure workers or in sales and customer service.

The government is expected to announce a new rate for the national minimum wage this month, following a recommendation from the Low Pay Commission. The national minimum wage has fallen in real terms for the past three years.

James Plunkett, director of policy at the Resolution Foundation, said:

“Low pay is fast becoming one of the defining economic challenges of our age.  The last few years have seen an unprecedented fall in wages but even before 2008 the UK was suffering from a low pay epidemic.

“Of course all countries have low paid jobs. But in the UK twice as many workers are low paid as in some other advanced economies. We pay the price not only in lower living standards but in increased spending on benefits for working families.  Policies like a strong minimum wage are essential to supporting low paid workers and making this spending sustainable in the long-term.”

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