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Millions face years on the breadline: Britain has more long-term low-paid workers than ever Millions face years on the breadline: Britain has more long-term low-paid workers than ever
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A generation of Britons is destined to spend years languishing in low-paid jobs barely above the minimum wage, with the number in poorly paid work at a historic high, a major report will reveal this week.A generation of Britons is destined to spend years languishing in low-paid jobs barely above the minimum wage, with the number in poorly paid work at a historic high, a major report will reveal this week.
More than five million workers are in low-paid work, with the proportion of people on low salaries rising from 21 to 22 per cent last year, according to the new research by the Resolution Foundation think-tank. It badly dents hopes of an economic recovery driven by consumer spending: millions are in jobs so poorly paid that they have little if anything left to spend after their basic needs have been met.More than five million workers are in low-paid work, with the proportion of people on low salaries rising from 21 to 22 per cent last year, according to the new research by the Resolution Foundation think-tank. It badly dents hopes of an economic recovery driven by consumer spending: millions are in jobs so poorly paid that they have little if anything left to spend after their basic needs have been met.
The report, Low Pay Britain 2014, reveals that 5.2 million workers earn less than £7.70 an hour, an increase of 250,000 on the previous year. The minimum wage is £6.50 an hour.The report, Low Pay Britain 2014, reveals that 5.2 million workers earn less than £7.70 an hour, an increase of 250,000 on the previous year. The minimum wage is £6.50 an hour.
The “stickiness” of low-paid work, defined as being less than two-thirds of median hourly pay (equivalent to £7.69 an hour), is a serious problem, it says. Almost a quarter of minimum-wage workers have remained on that rate for the past five years.The “stickiness” of low-paid work, defined as being less than two-thirds of median hourly pay (equivalent to £7.69 an hour), is a serious problem, it says. Almost a quarter of minimum-wage workers have remained on that rate for the past five years.
Women are still far more likely to be low paid than men. More than a quarter (27 per cent) fall into this category, compared with 17 per cent of men.Women are still far more likely to be low paid than men. More than a quarter (27 per cent) fall into this category, compared with 17 per cent of men.
Britain ranks poorly compared with other countries. Workers here are more likely to be low paid than those in broadly comparable economies such as Germany or Australia. They are twice as likely to be low paid as their counterparts in Switzerland, and four times as likely as those in Belgium.Britain ranks poorly compared with other countries. Workers here are more likely to be low paid than those in broadly comparable economies such as Germany or Australia. They are twice as likely to be low paid as their counterparts in Switzerland, and four times as likely as those in Belgium.
Matthew Whittaker, chief economist at the Resolution Foundation, said: “It’s troubling that the number of low-paid workers across Britain reached a record high last year. Being low paid – and getting stuck there for years on end – creates not only immediate financial pressures, but can permanently affect people’s career prospects.” The scale of the problem is a “financial headache” for the Government because it “fails to boost the tax take and raises the benefits bill for working people”, added Mr Whittaker.Matthew Whittaker, chief economist at the Resolution Foundation, said: “It’s troubling that the number of low-paid workers across Britain reached a record high last year. Being low paid – and getting stuck there for years on end – creates not only immediate financial pressures, but can permanently affect people’s career prospects.” The scale of the problem is a “financial headache” for the Government because it “fails to boost the tax take and raises the benefits bill for working people”, added Mr Whittaker.
Women are much more likely than men to be on very low pay (Rex)Women are much more likely than men to be on very low pay (Rex)
He said all political parties wanted to tackle low pay but the proportion of low-paid workers “has barely moved” in the past 20 years. “Raising the minimum wage can certainly help the very lowest paid workers, but we need a broader low-pay strategy in order to lift larger numbers out of working poverty,” he said. “Economic growth alone won’t solve our low-pay problem. We need to look more closely at the kind of jobs being created, the industries that are growing and the ability of people to move from one job or sector to the other.”He said all political parties wanted to tackle low pay but the proportion of low-paid workers “has barely moved” in the past 20 years. “Raising the minimum wage can certainly help the very lowest paid workers, but we need a broader low-pay strategy in order to lift larger numbers out of working poverty,” he said. “Economic growth alone won’t solve our low-pay problem. We need to look more closely at the kind of jobs being created, the industries that are growing and the ability of people to move from one job or sector to the other.”
 
Catherine McKinnell, Labour’s shadow Treasury minister, said: “These figures show that too many people are in low-paid jobs under this Government. Working people are over £1,600 a year worse off since the last election.” She said that Labour’s economic plan “will create more good jobs and make work pay”. A Labour government would increase the minimum wage to £8 an hour by 2020, give companies tax incentives to pay the living wage, expand free childcare for working parents, and introduce a lower 10p starting rate of tax.Catherine McKinnell, Labour’s shadow Treasury minister, said: “These figures show that too many people are in low-paid jobs under this Government. Working people are over £1,600 a year worse off since the last election.” She said that Labour’s economic plan “will create more good jobs and make work pay”. A Labour government would increase the minimum wage to £8 an hour by 2020, give companies tax incentives to pay the living wage, expand free childcare for working parents, and introduce a lower 10p starting rate of tax.
“The Tories only stand up for a privileged few. They want to cut tax credits again for millions of working families while keeping a £3bn-a-year tax cut for the top 1 per cent,” she said.“The Tories only stand up for a privileged few. They want to cut tax credits again for millions of working families while keeping a £3bn-a-year tax cut for the top 1 per cent,” she said.
A spokesperson for the Department for Business, Innovation and Skills said: “We have taken continued action to help low-paid workers by taking lower earners out of income tax.” The Low Pay Commission has been asked “to consider how we can further increase the real value of the national minimum wage, without having an adverse impact on jobs”.A spokesperson for the Department for Business, Innovation and Skills said: “We have taken continued action to help low-paid workers by taking lower earners out of income tax.” The Low Pay Commission has been asked “to consider how we can further increase the real value of the national minimum wage, without having an adverse impact on jobs”.
This comes amid growing concern for the future of millions of people in Britain destined to spend their lives in poverty. “Endemic levels of low pay mean that millions of families are worse off today than they were before the recession,” warned the Social Mobility and Child Poverty Commission last week. Its State of the Nation report revealed that only one in five workers on low salaries in 2002 had improved their circumstances 10 years on. “Too many of the jobs that are being created in the economic recovery are low income and high insecurity. They are a dead end, not a road to social progress.” And the “impact of welfare cuts and entrenched low pay will bite between now and 2020. Poverty is set to rise, not fall”, the report stated.This comes amid growing concern for the future of millions of people in Britain destined to spend their lives in poverty. “Endemic levels of low pay mean that millions of families are worse off today than they were before the recession,” warned the Social Mobility and Child Poverty Commission last week. Its State of the Nation report revealed that only one in five workers on low salaries in 2002 had improved their circumstances 10 years on. “Too many of the jobs that are being created in the economic recovery are low income and high insecurity. They are a dead end, not a road to social progress.” And the “impact of welfare cuts and entrenched low pay will bite between now and 2020. Poverty is set to rise, not fall”, the report stated.
Many of the jobs created in recent years are “very much of the low-paid, casual and zero hours variety”, said Frances O’Grady, TUC general secretary. “This risks many people and their families simply being left behind, unable to share in any benefit from the economic recovery. Once in a low-paid job, it can be hard, if not nigh-on impossible, to get higher paid work. Without a new approach it’s quite likely that the overwhelming majority of the five million workers currently in low-paid work will still be stuck there a decade from now.”Many of the jobs created in recent years are “very much of the low-paid, casual and zero hours variety”, said Frances O’Grady, TUC general secretary. “This risks many people and their families simply being left behind, unable to share in any benefit from the economic recovery. Once in a low-paid job, it can be hard, if not nigh-on impossible, to get higher paid work. Without a new approach it’s quite likely that the overwhelming majority of the five million workers currently in low-paid work will still be stuck there a decade from now.”