Good news for low-paid workers

10 June 2019

Low pay could be eliminated by the middle of the 2020s, according to the Resolution Foundation’s latest annual Low Pay Britain report which highlights that the proportion of low-paid workers across Britain has fallen to its lowest level since 1980.

The think tank’s report examines the extent of low pay across the economy (defined as two-thirds of median hourly earnings) and examines where the UK’s wage floor could be heading in the coming years, given the two main parties’ plans to raise the minimum wage even higher.

The number of workers earning the legal minimum now stands at a record two million (7.3% of all workers).

Nye Cominetti, 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, the ratcheting up of which has not stopped employment rising to a record high”.

Available at https://www.resolutionfoundation.org/app/uploads/2019/05/Low-Pay-Britain-2019-report.pdf, Low Pay Britain 2019 argues that the minimum wage is at a crossroads, with an uncertain future.

The five-year uprating period instituted in 2016 comes to an end next year, and policy-makers need to decide where to take it next, the report points out.

The Chancellor and the Labour Party have both announced ambitious plans for its future, either of which would result in the UK having one of the highest minimum wage rates in the world.

“In this report”, the think tank explains, “we offer a framework for how to marry such (welcome) ambition with caution given that we do not know where the optimal level of the wage floor lies.”

The TUC has reacted to the report by arguing that its message is clear: working people can have a real pay rise without jobs suffering.

“That’s why,” General Secretary Frances O’Grady said, “the Government should raise the minimum wage to £10 per hour as soon as possible. And young workers — who are most likely to be stuck on low pay — must be given the same rate for the job.”

Comment by Pay and Reward Manager at Croner, Clare Parkinson

There are currently no plans to increase the National Minimum Wage (NMW) to £10 an hour and we are yet to find out what the new rates will be come April 2020.

That said, this reminds employers that the minimum wage continues to receive much attention from the Government and that more changes are expected over the next few years.

Employers need to remember that they will be expected to meet the requirements of the NMW regardless of the rates that are set. This may be slightly challenging for smaller companies who could struggle to keep up with the new amounts of pay, but I would advise them not to underestimate the importance of wages in maintaining strong and successful relationships with their employees.