Good news: the pay gap has narrowed. Bad news: Londoners’ wages are getting worse

Annual pay rose 2.5 per cent for the average Londoner, compared to 5.9 per cent for the rest of the UK

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Data analysed by the Financial Times(£) today shows that the pay gap between London and the UK has narrowed. However, this is not good news for the capital’s workers. The reduction in pay disparity shows that London’s wage growth is slowing, despite the fact that its economy has recovered better than the rest of the UK from the crisis, and the fact that there has been rapid employment growth in the capital.

Between April 2008 and April 2014, the FT reports, annual pay rose 2.5 per cent in real terms for the median worker living in London, 5.9 per cent for the average UK worker and 9.9 per cent for the median worker living in the North East.

There are a number of factors attributed to this weak earnings growth. The average age of London’s workers is 34, compared with a nationwide average of nearly 40. Additionally, the capital has a disproportionately high private sector economy compared to the rest of the UK, meaning that workers are less likely to be unionised and therefore may be more flexible. The level of competition for London’s jobs means that workers may be more willing to accept low pay just to get themselves on the ladder.

In August 2014 research by the New Policy Institute (NPI) found that nearly one-fifth of London workers were earning less than the Living Wage. According to the NPI, the proportion of jobs paying below the Living Wage grew year-on-year, from 12 per cent in 2009, 17 per cent in 2012 and 18 per cent in 2013.

Shockingly, 44 per cent of Bangladeshi and Pakistani workers in the capital were earning below the Living Wage in 2014, as well as 41 per cent of Black Africans.

When we talk about the gap between London and the rest of the UK it is easy to overstate the way the capital’s money filters down to people living there. People think of suited men in Square Mile with £6 pints of beer and cut-glass buildings, or else of gentrified areas with extortionately priced art studios and pop-up rip-offs.

But just because the elite live in London, it doesn’t mean that Londoners are the elite. The reality is that London is a city where one in three people is foreign born and likely to be unsure of their employment and pay rights, and where wealth varies dramatically from borough to borough. 97 per cent(£) of Camden residents have internet access, compared to 82 per cent in Barking and Dagenham, and the difference in life expectancy between residents of Knightsbridge and Southwark can be as much as 20-25 years.

Meanwhile, the cost of living in London continues to increase, with seemingly constant rises in travel fares and rent prices. The inequality within London is as striking as that between London and the rest of the country. The findings of the FT today tell a story of low-paid jobs being created for an increasingly desperate workforce who are missing out on the capital’s recovery.

Ruby Stockham is a staff writer at Left Foot Forward. Follow her on Twitter

2 Responses to “Good news: the pay gap has narrowed. Bad news: Londoners’ wages are getting worse”

  1. Leon Wolfeson

    Recovery? Again with that!
    There’s a bubble in the city…

  2. PaulineCBrown

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