Quarter of poorly paid workers in UK permanently stuck in low wage jobs, finds research

Experts warn UK has 'endemic' problem with low pay as it emerges just one in six have managed to permanently escape low pay in past decade

May Bulman
Social Affairs Correspondent
Thursday 19 October 2017 00:00 BST
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People stuck on low pay have seen their hourly wages rise by just 40p in real terms over the last decade (File photo)
People stuck on low pay have seen their hourly wages rise by just 40p in real terms over the last decade (File photo) (REUTERS)

The UK has an “endemic” problem with low pay, experts have warned, after it emerged that one in four low paid workers in the UK are permanently stuck in poorly paid jobs.

New research from the Social Mobility Commission has found that a quarter of low paid workers remained permanently stuck on a low salary, while nearly half (48 per cent) have fluctuated in and out of low pay over the course of the last ten years. Just one in six low paid workers, or 17 per cent, meanwhile managed to permanently escape from low pay in the last decade.

The study, carried out by the Resolution Foundation, tracked individuals’ pay over 10 years, exploring trends in low pay over recent decades and examines the factors linked to low pay and progression.

It revealed that part-time workers are disproportionately affected, with nearly two thirds, or 64 per cent, of workers who are “stuck” in low pay working part-time, while nearly three quarters, or 71 per cent, of people who escaped low pay were in full time work.

On average, 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, the findings showed.

The report also found that women were more likely to be low paid than men and are also far more likely to get stuck in low pay, with the lack of good quality, flexible work to fit alongside childcare responsibilities making it particularly difficult for women in their early twenties to escape low pay.

Age is also identified as a factor with older people far less likely to escape low pay than their younger counterparts, with the report finding that 23 per cent of low paid people aged 25 or under escaped low pay over the following decade, compared to 15 per cent of those aged 46 to 55.

The research also found that in the last decade, low paid workers were mostly likely to escape in Scotland and least likely to escape in the North East.

It added 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 be still around four million low paid employees in 2020, highlighting the scale of Britain’s low pay challenge.

It comes after Labour leader Jeremy Corbyn launched an attack last month on the “epidemic of low pay”, condemning top bosses with salaries thousands of times more than those of the average worker. He argued that the pay gap at firms such as McDonald’s – whose chief executive is paid 1,300 times more than ordinary staff – was symbolic of the “deep inequality and injustice that scars our society”.

Responding to the latest findings, the Rt Hon Alan Milburn, chair of the Social Mobility Commission, said the UK had an “endemic” low pay problem, arguing that while record numbers of people are in employment, too many jobs are low skill 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,” he said.

“Britain’s flexible workforce gives us global economic advantage but a two-tier labour market is now exacting too high a social price. A new approach is needed to break the vicious cycle where low skills lead to low pay in low quality jobs.

“Welfare policy should focus on moving people from low pay to living pay.”

Mr Milburn called for the Government to join forces with employers in a new national effort to improve progression and productivity at work, warning that without concerted action, Britain would become “more socially divided and social mobility will continue to stall”.

Conor D’Arcy, senior policy analyst at the Resolution Foundation, meanwhile said: “Britain has one of the highest proportions of low paid work in the developed world. And while three-quarters of low-paid workers did manage to move into higher-paying roles at some point over the past decade, the vast majority couldn’t sustain that progress.

“This lack of pay progress can have a huge scarring effect on people’s lifetime living standards. 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.”

Dr Carole Easton OBE, chief executive of the Young Women’s Trust, highlighted that low pay was driving many young people, particularly women, into reliance on foodbanks, saying: “Young people – and particularly young women – are getting stuck on low pay and have little hope of finding a way out.

“As a result, we are seeing many young people struggling to make ends meet, falling into debt and using foodbanks to put food on the table. It can be especially hard for young mums; in many cases, low pay means an hour’s childcare can cost more than an hour’s wages.”

A spokeswoman for the Department for Business, Energy and Industrial Strategy said: “We have more people in work than ever before, taken 1.3 million people out of income tax altogether since 2015 and the national living wage has delivered the fastest pay rise for the lowest earners in 20 years.

“But we want to go further by creating good quality jobs for all through our modern industrial strategy, boosting earning power and improving living standards across the country.”

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