One in five workers now low paid



4 September 2014

Center for Cities, an independent think tank, has published a report, “unequal opportunities”. Commissioned by the Joseph Rowntree foundation, the report draws attention to the polarisation of the employment market: soaring executive pay and bonuses at one end, a proliferation of low paid, part-time work at the other.

One in five UK workers are now low paid; low pay is defined as wages of less than £7.71 an hour, or two-thirds of the hourly median wage (£11.56).

“There’s no doubt that low-paying jobs have always existed, and that some UK cities continue to see significant growth in high-paid jobs. But what has changed over the past few decades is that, in many cities, the pathways to upward mobility have been severely eroded, as their jobs markets polarise and the stable jobs of the ‘middle’ begin to slip away,” said Alexandra Jones, chief executive of the Centre for Cities.

The research shows that cities with large manufacturing bases are the worst hit by low pay, with the North-East the region with the most low paid workers.



In 1975, fewer than one in ten young (8%) workers were low paid, compared to almost three in ten (29%) today.

This reflects a structural shift in the labour market, rather than a short term effect of recession, and will have long-term consequences for a generation of young people, affecting financial stability, skills acquisition, and property ownership.



A report by Incomes Data Services for the TUC, cites the fall in stable, high-paid jobs in manufacturing and finance with a rapid growth of part-time service industry roles, as part of the explanation for the increase in low paid work. These jobs often provide fewer hours than wanted, or are necessary to maintain adequate living standards.

Frances O’Grady, said: “Pay settlements are barely keeping up with the cost of living. We know that many employers can and should be paying their staff more”



“The causes of Britain’s pay squeeze are much wider and deeper than stingy pay rises. The economy is very good at creating low-paid jobs but not the well-paid ones that workers really need. Worryingly, the growth of low-paid work is as much a feature of the recovery as it was during the recession.”



While part-time work and zero hours contracts are dressed up as “flexible”, underemployment – workers wanting more hours – now stands at 3.4 million, and the majority of families in poverty are in work, as of this year.

The TUC points out that despite two years of apparent economic growth, working people are suffering the longest pay squeeze in over a century, with wage growth hitting its lowest level since records began last month. Wage growth remains well behind inflation.



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