A quarter of low paid workers in the UK are stuck in poorly paid jobs, according to the Social Mobility Commission.
Its ‘Great Escape?’ report, carried out by the Resolution Foundation, suggests that low pay is “endemic” in the UK.
Pay rates and trends
The report, which tracks workers’ pay levels over 10 years, divides people into three groups:
- ‘stuck’ – those who are stuck in low pay every year;
- ‘cyclers’ – those who move out of low pay at some point, but who have not consistently stayed above the low pay threshold by the end of the decade; and
- ‘escapers’ – those who earn above the low pay threshold in each of the last 3 years, suggesting they have remained in higher pay.
Based on these definitions, it found that just one in six low-paid workers had managed to escape from poorly paid jobs in the last decade, while a quarter of low-paid workers remained permanently “stuck” with low wages.
Almost half (48%) fluctuated in and out of low pay over the same period.
The report defines low pay as hourly earnings below two-thirds of the median hourly wage, which was £8.10 last year.
It also calculated that the median hourly wage for an average person across the entire British workforce was £12.10 per hour in 2016.
Women are more likely to be low paid than men and are also far more likely to get stuck in low pay, according to the commission. In particular, women in their early twenties find it hard to escape low paid roles due to a lack of good-quality, flexible work to fit alongside childcare.
Over the longer term, however, the proportion of women getting “stuck” with low pay has fallen from 48% (1981 to 1991) to 30% (2006 to 2016). Over the same periods, the risk of long-term low pay for men has increased from 20% to 25%.
On average, the report finds, people stuck in the low pay trap have seen their hourly wages rise by just 40p in real terms over the last decade, compared to a £4.83 pay rise for those who have permanently escaped.
Older workers are also far less likely to escape low pay than their younger counterparts. The report found that 23% of low-paid workers aged 25 or under escaped low pay over the following decade, compared to 15% of those aged 46 to 55.
It adds that while the national living wage is reducing the number of people in low-paid work – last year saw the biggest fall in 40 years – there will still be around 4 million low-paid workers in 2020, highlighting the scale of Britain’s low pay challenge.
Commenting on the findings, Alan Milburn, chair of the Social Mobility Commission, said: “Britain has an endemic low pay problem. While record numbers of people are in employment, too many jobs are low skilled and low paid.
“Millions of workers – particularly women – are being trapped in low pay with little chance of escape. The consequences for social mobility are dire.”
Conor D’Arcy, senior policy analyst at the Resolution Foundation, said that employers needed to improve career routes to steer lower paid workers into better pay progression.
He added: “The national living wage is playing a massive role in reducing low pay, but it can’t solve the problem alone. Employers need to improve career routes for staff, while government should support them with a welfare system that encourages progression at work.”
Andy Bagnall, director at KPMG UK, said the figures were “shocking”. “With the cost of living higher than it’s ever been, the reality for many is that they are forced to live hand to mouth,” he said.
“As employers we can take active steps to address this, by paying the real Living Wage. This also delivers tangible business benefits. In our own firm it has improved staff morale and driven a rise in service standards, improved the retention of staff and increased our productivity.
“It may not be possible or practical for everyone, but all organisations need to do what they can to address the problem of low pay. Of course, change cannot happen instantly, but making an initial assessment is an important first step.”