Almost three-quarters of Britain’s workers who were on low pay in 2002 failed to escape from it over the course of the following decade, with women and those in the North East most likely to be affected, according to a comprehensive study of who is able to get on in life by moving up the earnings scale.
The Starting out or Getting Stuck? report from independent think-tank the Resolution Foundation shows that of the 4.7 million workers who were low-paid in 2002 – 1.3 million (27 per cent) didn’t leave low pay at any point during the decade and that a further 2.2 million (46 per cent) cycled in and out of low pay, but had failed to escape it for good by the end of the decade.
Only 800,000 workers (18 per cent) escaped low pay by moving up the earnings ladder without slipping backwards over a sustained period during these 10 years.
A further 400,000 (9 per cent) retired or otherwise left the labour market during the decade.
With those who were stuck and those who cycled in and out of low earnings together making up 73 per cent of the low-paid, the Foundation says the findings illustrate the extent of persistent low pay in Britain and how hard many workers find it to move up the earnings ladder.
However, the report, which examined trends in pay since the mid-1970s, also found that though there has been a fair amount of stability in earnings mobility, there has been a slight increase over time in the numbers escaping low pay and a fall in the proportion stuck on it.
Mobility for those on low pay increased in the 2000s compared to the 1990s. And of those who did escape low pay, many progress a long way up the earnings ladder, it says.
The North East is the region where workers are most likely to be stuck in low pay.
Half of all workers stuck over the decade were aged between 41 and 60 in 2012 – meaning they had spent up to 10 of their peak earning years (from age 30 to 50) in low pay. This suggests some people may remain stuck for their entire careers, says the report
The sectors where workers were most likely to be stuck were elementary occupations (such as manual labourers) where one in three (32 per cent) were stuck for the decade to 2012 and admin workers where three in 10 (30 per cent) were stuck
Of the minority that managed to escape low pay during the decade many progressed a long way with roughly half at least two-thirds of the way up the earnings scale by 2012.
The report also offers clues about what makes the escapers different from those who are either stuck or who cycle in and out of low pay. It found that:
Alex Hurrell, senior analyst at Resolution Foundation and author of the report, said: “For many people, low pay is not a first rung on the ladder – it’s a long-term or even permanent reality.
Identifying those who are least likely to escape low pay is the first step in targeting policies to help them get on.”
Gavin Kelly, chief executive of the Resolution Foundation, said: “Living on low pay in 2013 is tough, but being stuck on it for years on end is harder still.
This report shines a light on the persistent nature of low pay for millions of workers and shows that women, those in regions such as the North East, the East Midlands and Wales, and people working in sectors like administration are far likelier to be stuck in low pay than others.
It also highlights the large numbers who cycle in and out of low pay over time. Limited earnings mobility is a long-running problem in our economy which spans a number of decades and has occurred under governments of different complexions.”