The National Living Wage (NLW) has helped reduce the number of workers in low pay jobs by 18 per cent in the year to April 2017, the lowest proportion since 1982.
Findings from the Resolution Foundation’s annual Low Pay Britain report revealed that, the number of low-paid employees fell below five million for the first time in 15 years, while planned increases to the NLW are projected to further reduce the prevalence of low pay to 15 per cent by 2020.
Despite these positive figures, the Foundation highlighted that one in six employees remain in low-paid jobs, including the majority of workers in hotels and restaurants. Low pay was also found to be more prevalent in certain areas. The report warned that a higher minimum wage cannot solve all low pay issues and there is a ‘triple threat’ of new challenges facing low-paid workers.
Conor D’Arcy, Senior Policy Analyst at the Resolution Foundation, said that although the NLW has kick started a low pay revolution, now is not the time for complacency.
“Workers today too often find themselves stuck on the shop floor with no chance to move up the ladder. Many are employed by one of a handful of big hiring, but low paying, firms in an industry or local area with few other options available. Women remain far more likely to be trapped in low pay than men,” he said.
The three threats outlined by the report are progression, power and the gender pay gap. It highlighted that just four per cent of sales assistants had moved on and up to become supervisors or managers in five years. Overall, just one in six low-paid employees had permanently escaped low pay over the past decade.
Power is a further issue, where a small number of firms dominate a sector which can lead to lower wages or worse terms and conditions. The research revealed that 16 per cent of low-paid employees work for just 20 firms, a much higher proportion than for high-paid employees at nine per cent.
Finally the gender pay gap is a key issue, with 22 per cent of women in low paid positions compared with 14 per cent of men. Women are also less likely to progress out of low pay.
“Tackling these new triple threats is how business and policymakers can build on the success of the NLW,” concluded D’Arcy.
