Fighting Low Pay

The new Joseph Rowntree Foundation report on “Rewarding Work for Low Paid Workers” reveals the complexity of low pay in the UK. The report looks at how effective human resources and development practices are for tackling in work poverty and whether a business case could be made to persuade low paying employer to increase wages.

The report contains detail on patterns of low pay in the UK which campaigners may find useful.

JRF make clear that voluntarism (waiting for companies to just raise pay themselves) "faces an uphill struggle if it’s to successfully reduce the relatively high incidence of low wage/low quality employment in the UK economy”. There is no substitute; it seems, for trade union action when it comes to improving workers lives.

There are now more people living in poverty in households with work than in households with no work.

5% of jobs (around 1.5 million) are minimum wage jobs (NMW) in the UK. And 20% of workers (5million) earn less than the Living Wage £7.65 per hour. This places the UK second only to the US in having high numbers of low paid workers.

The report also shows that the relationship between low pay and in work poverty is complex. Multi earner households even on low pay can avoid poverty just as a single earner can be living in poverty on a reasonable wage if they have non- working dependants. In fact 44% of adults in working poverty aren’t low paid.

Hospitality, retail and cleaning sectors are the worst offenders. They account for 54% of minimum wage jobs. Social care, transport, food processing and storage account for 4% each.

The incidence of low pay rises as the size of the organisation falls. Minimum wage jobs account one in 20 jobs in a large firms but one in 12 in small firms.

A 2011 survey (Workplace Employment Relations Survey WERS) showed that in one in six private sector workplaces one in four employees were paid an hourly rate below the adult NMW. The proportion in the public sector is one in forty. It’s no coincidence that trade unions have stronger representation in the latter.

The continued outsourcing of care and cleaning jobs from the public sector raises real concerns for the future wage rates of workers in these sectors.

What is clear is that low pay while not the sole determinant is a key factor in ensuring that many people live in poverty. And in work poverty costs the rest of us money.

If the Living Wage was paid across the UK we would save £3.6billion through a combination of increased tax revenues, higher National Insurance Contributions and reduced spending on tax credits. In short our taxes subsidise low paying companies’ profits.

UNISONs proposals to the Procurement Bill, currently being taken up by the Scottish Government, to guarantee the living wage and open up public contracts to smaller companies will help reduce the incidence of low pay. Joining a union and fighting for your rights will be even better