A new report from the Low Pay Commission (LPC) estimates that around 371,000 people were underpaid in April 2024.
The figures published today (19 December) in the Compliance and Enforcement of the National Minimum Wage in 2024 document show a slight increase from last year, but the numbers are still below those pre-pandemic.
According to the LPC, the latest data suggests a drop in low-paid workers being underpaid when examined in the context of overall minimum wage coverage greatly increasing between 2023 and 2024 from 1.5m to 1.9m.
In April 2024, among workers aged 21 and over, 344,000 jobs were underpaid, with 140,000 of these being underpaid by more than 50 pence per hour. A similar number paid within 10p of the national living wage.
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The LPC highlighted that details published alongside HM Revenue and Customs’ most recent naming rounds suggest that the leading causes of underpayment are deductions and unpaid working time, with each happening in more than one in three cases.
Baroness Philippa Stroud, LPC chair, said: “Too often the low-paid workers we speak with feel powerless and cut adrift from the institutions which exist to protect them. This can cause low-paid workers to put up with poor employment conditions and underpayment for fear of repercussions.
“The all-too-common experience of insecurity and uncertainty over their rights can discourage workers from reporting underpayment or trying to find better jobs. A strategy to end underpayment will begin with restoring low-paid workers’ confidence.”
She believes the government’s ambitions for the minimum wage should be backed by a similar level of ambition for enforcement, stating the Fair Work Agency is a unique opportunity to reform labour rights enforcement and that the Employment Rights Bill picks up several relevant recommendations previously made by the LPC.
Baroness Stroud added: “Our report restates the scale of this problem and suggests some fundamental ways the new agency could build confidence in the enforcement system.”
The LPC, which makes recommendations to the government on the enforcement system, added that evidence from the last decade suggests that for many underpaid workers, underpayment lasts a long time. It noted that one in three remain stuck in underpaid positions as each year passes.
It believes that the tight labour market has meany more underpaid workers can move into roles where they are paid correctly, but this has slowed as the market following the pandemic has shifted.
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