‘Quarter of low paid workers permanently stuck on low pay’

Just one in six poorly paid workers has escaped low pay in the last decade, with women most likely to be trapped on low earnings, according to a new report by the Social Mobility Commission.

The ‘Great Escape?’ report, carried out by the Resolution Foundation, found a quarter of low paid workers remained permanently stuck in low pay and nearly half (48 per cent) fluctuated in and out of low pay over the course of the last ten years.

The report finds that women are more likely to be low-paid than men and are also far more likely to get stuck in low pay. It is particularly difficult for women in their early 20s to escape low pay, says the report, with the lack of good quality, flexible work to fit alongside childcare responsibilities as the most likely barrier.

The report does point to some progress for women, saying the proportion of women getting stuck has fallen from 48 per cent in 1981-91 to 30 per cent in 2006-2016. In contrast, the risk of long-term low pay has increased for men over the same period (from 20 per cent to 25 per cent). The Resolution Foundation says this is likely due to the increasing number of men working in low-paid part-time work.

The report finds that nearly two thirds (64 per cent) of workers who are ‘stuck’ in low pay work part-time, while nearly three quarters (71 per cent) of people who escaped low pay were in full time work.

It says that on average, people stuck in the low-pay trap have seen their hourly wages rise by just 40 pence in real terms
over the last decade, compared to a £4.83 pay rise for those who have permanently escaped.

Age is also identified as a factor with older people far less likely to escape low pay than their younger counterparts.

It adds 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.

Conor D’Arcy, Senior Policy Analyst at the Resolution Foundation, 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.”

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