News | Published May 31 2019

Number of low-paid workers falling as minimum wage rises

The number of low-paid workers in Britain has fallen to its lowest level since 1980, according to a new report.

Analysis by the Resolution Foundation suggests that the National Living Wage has “significantly” reduced low pay, with the number of low-paid workers dropping by 200,000 in the last year.

Young adults are particularly benefitting, with 120,000 of these low-paid workers aged between 21 and 30.

The think tank said this was evidence that supported the need to continue raising the minimum wage, adding that it welcomes ambitious plans set out by both main parties.

The chancellor is pushing for big changes to the minimum wage which could see it raised to 66 per cent of median earnings.

This would meet the OECD’s definition of low pay and therefore eliminate it completely.

Labour has also pledged to raise the minimum wage to £10 per hour and to extend this to under-18s.

If implemented, both plans would resultin the UK having one of the highest minimum wage rates in the world.

Despite welcoming these plans, the report cautioned that rapid minimum wage increases could see low-paid workers priced out of jobs in the event of a recession.

It also argued that it would still be possible to end low pay by the mid-2020s even with a slower rate of increase than that seen since 2016.

The report stated that it was important to focus on “the journey, rather than the ultimate destination”.

Nye Cominetti, an economic analyst at the Resolution Foundation, said: “The National Living Wage has transformed Britain’s low pay landscape, with the number of low-paid workers falling by 200,000 in the last year alone.”

“Women and young people have been the main beneficiaries of a higher minimum wage, whose ratcheting up has not stopped employment rising to a record high.

“It’s great that both main parties want to go even further on raising the minimum wage and eliminate low pay altogether.

“But such an ambitious move would transform the labour market, and must therefore be approached boldly but cautiously."

The current National Living Wage for workers aged 25 and over is £8.21. This differs from the National Minimum Wage that applies to workers aged 24 and under.

The Living Wage Foundation charity says that the wage level needed to "meet the costs of living" is £9 an hour across the UK and £10.55 an hour in London.

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Authored by

Joshua Sandiford
Junior Political Editor
May 31 2019

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