Resolution Foundation report: Low Pay in Britain 2016

This research, undertaken by researchers as the Resolution Foundation, used data made available via the Office for National Statistics (ONS) Secure Research Service (SRS), which is being expanded and improved with ADR UK funding. 

The Resolution Foundation produced their sixth annual report on the prevalence of low pay in Britain, using the latest data available (2015) to map out the scale of low pay and the groups most affected. The report shows how pay has changed over recent decades and looks at what the coming years might hold, particularly given the result of the UK’s EU Referendum and the introduction of the National Living Wage (NLW) in April 2016. 

A combination of data sources were used in this report, including the Living Costs and Food Survey (LCF) and Annual Survey of Hours and Earnings (ASHE), to model how low pay could evolve up to 2020. The report focuses on the latest developments in the labour market; the relationship between the NLW and low pay; and the impact of the EU referendum on low pay. The report also provides descriptive statistics on key findings, trends and future models. 

The main research findings of this report: 

• One in five employees (21% or 5.7 million individuals) were low paid in Great Britain in 2015. There has been little change in this proportion over the past 20 years. 

• More than one in five employees (23%, or 6.3 million individuals) were paid less than the voluntary Living Wage in 2015. This proportion remains unchanged since 2014. 

• One in twenty employees (6%, or 1.5 million individuals) were on the minimum wage. This proportion has been increasing steadily since the early 2000s. 

• Those most likely to be low paid include women, the young, part-time and temporary employees, those in lower-skilled occupations, and those employed in the hospitality, retail and care sectors. 

The NLW is set to rise relative to typical pay through to 2020, which will boost the pay of millions of lower paid workers and represents the most significant step forward in the battle against low pay since introducing the National Minimum Wage (NMW) in 1999. However, the report concludes that any suggestions of a return to pre-crisis pay levels remains some way off. The EU referendum is set to have far-reaching consequences across the economy and adds a level of uncertainty to the future of the NMW. 

Britain has one of the highest proportions of low paid workers in any advance developed economy, and this has barely changed in the past 20 years. The report concludes that the NLW will transform the countries’ low pay landscape and boost the pay of around six million workers and also brings huge challenges for employers. 

At an event in Westminster to launch this report, Margot James (Minister for Small Business, Consumers and Corporate Responsibility in the Department for Business, Energy and Industrial Strategy (BEIS)), delivered a keynote speech outlining the new government’s strategy to help those on low pay earn more today and progress out of low pay. The Minister stated that “we want to build on the legacy of the minimum wage and make sure that people feel supported and paid for their hard work, and it’s with help from organisations like the Resolution Foundation that we understand our impact on people’s lives.” They have responsibility for the NLW, which was followed by a debate from a panel of experts, on the action required to take on Britain’s low pay challenge.