Proportion of UK workers on low pay at lowest level since 1997

The proportion of UK workers on low pay has fallen to its lowest on record, even though living standards for the average employee have not improved since the 2008 financial crisis, according to official data.

Comprehensive figures on earnings published by the Office for National Statistics on Wednesday showed that 10.5 per cent of employee jobs were paid at an hourly rate below two-thirds of the median in April 2022, down from 14.3 per cent in 2021 and the lowest since records began in 1997.

The figures reflect the impact of sharp increases in the UK’s statutory minimum wage since 2016, when the government set a target for it to reach 60 per cent of median earnings by 2020. That goal was reframed in 2019, with plans to raise the wage floor to two-thirds of median earnings by 2024.

As well as the concentration of employees paid within 20p of the statutory minimum of £9.50 an hour, the ONS said more employers had chosen to set hourly pay at £10. Another grouping — visible for the first time this year — were setting it at £11.

This could reflect growing uptake of the higher, voluntary living wage set yearly by the Living Wage Foundation. The rate, which directly affects about 400,000 people whose employers are accredited by the charity, is increasingly used as a benchmark by other big companies.

It could also be the result of growing competition for staff in sectors such as hospitality and logistics that have struggled to recruit following Brexit and the coronavirus pandemic.

Nye Cominetti, economist at the Resolution Foundation think-tank, said the figures suggested pay growth had been strongest at the bottom since 2019, casting doubt on more recent administrative data showing top earners forging ahead in the post-pandemic recovery.

However, they also confirm the overall picture of a labour market in which average wages have now stagnated in real terms for well over a decade.

Median weekly pay of £640 for full-time employees was 5 per cent higher in nominal terms than in April last year. But the ONS warned that this annual growth rate was probably flattered by comparison with a period in which many employees remained furloughed.

Even so, median earnings were 2.6 per cent lower than in 2021 after adjusting for inflation, with living standards falling back below their level on the eve of the 2008 financial crisis.

Cominetti noted that for some groups — including men, and public sector workers — average hourly pay had fallen in real terms over the three-year period since 2019.

Frances O’Grady, general secretary of the Trades Union Congress, the umbrella body for the UK’s trade union movement, said this was a “shameful” indictment of a government that had presided over “the longest and harshest squeeze on earnings in modern history”.