The share of jobs paid below the UK’s voluntary living wage rose at the fastest rate on record last year as hiring slowed, reflecting the pressures facing low-wage employers even before the autumn Budget landed them with higher taxes.
The Living Wage Foundation on Thursday said 5mn jobs — 15.7 per cent of all employee jobs in the UK — were paid less in April 2024 than the real living wage, which the charity sets annually at the minimum needed for acceptable living standards.
The living wage stands at £12.60 UK-wide and £13.85 in London, and the foundation’s research showed that 3.7mn jobs, or 13 per cent of the total, were low paid by this measure in 2023.
LWF director Katherine Chapman said the findings showed “the biggest rise in low-paid jobs we’ve ever seen, with millions of workers struggling to afford the basics”.
The year-on-year rise in low pay — the biggest since the LWF began tracking it in 2012 — marks an abrupt reversal of the trend seen immediately after the pandemic, when acute labour shortages in sectors such as hospitality and logistics prompted employers to offer entry level wages well above the statutory minimum in order to recruit.
Hiring has since slowed significantly as businesses struggle with intense cost pressures and stagnant economic activity, and warn of higher prices and job cuts owing to rises in the minimum wage and employer national insurance contributions announced in the autumn Budget.
Separate data from job search site Indeed on Thursday showed that despite a seasonal new year upswing, job postings remained 15 per cent below their pre-pandemic baseline in early February, as employers prepared for the tax increases to kick in from April.
Postings in areas such as retail and logistics — which will be harder hit by the upcoming NICs increase — were declining “well into the new year”, Indeed said.
Josh Cottell, head of research at the LWF, said employers appeared to be finding it harder to maintain higher pay rates for more experienced staff, after successive years of high inflation and double-digit increases in the statutory minimum wage.
This means strong gains for people at the very bottom of the pay scale are not feeding through, as they did in the past, to employees with higher skills, experience or responsibility.
The statutory minimum wage stood at £8.72 for employees aged 25 upwards in 2020, and at £11.44 for those aged 21 and up in 2024. It is set to rise to £12.21 in April, in line with a government target that the hourly rate should be at least two-thirds of UK median earnings.
The share of workers paid below the voluntary living wage rose fastest in traditionally low-paid sectors such as hospitality, retail and social care.
The LWF’s analysis is based on official data that offers the most detailed picture available of UK earnings but has been subject to big revisions after changes in methodology. Cottell said the changes had not had a significant impact on the charity’s findings.