One reason for this could be the failure of real earnings growth to keep up with minimum wage increases
There is a bigger concentration of jobs at the bottom end of the pay scale in 2015 than there was in 1997, many of them being paid close to the minimum wage. This is the finding of the Office for National Statistics (ONS), which has released new analysis of its Annual Survey of Hours and Earnings today.
The National Minimum Wage (NMW) was introduced in 1999, set at £3.50 per hour for people over 22. The rate has gradually increased over time, standing at £6.70 per hour in October 2015. The ONS says that over this period, the proportion of hours worked at or close to this rate has increased.
In 1999, around 2 per cent of hours were paid within 2 per cent of the NMW, and this has steadily increased to more than 5 per cent of hours in 2015.
Looking further back, the ONS finds that in 1997 many jobs were paying between £4 and £5 per hour, with the number of jobs being paid more than this gradually decreasing as hourly pay increased.
In 2015, by contrast, there is a large spike of jobs being paid around the £6.50 mark – (the NMW for workers aged over 21 in 2014). Above this level of pay, the distribution follows a similar pattern to that of 1997.
So why are more people being paid less? The ONS says one possible reason is that earnings growth for employees hasn’t always matched increases to the minimum wage – which have been greater than inflation in most years since its introduction.
In 2002, around 70 per cent of full-time employees saw real earnings growth (a measure that is adjusted for inflation). In 2011, following the economic downturn, this had fallen to around 35 per cent. Many full-time employees actually saw reductions in their real weekly earnings during this time.
By 2015, the trend had reversed again, with around 70 per cent of full-time employees experiencing real weekly earnings growth in the week to April.
See the ONS’s full December 2015 Economic Review here.
Ruby Stockham is a staff writer at Left Foot Forward
4 Responses to “ONS: Number of workers on minimum wage at a record high”
Rowdie111
Might just be something to do with the record numbers of immigrants coming in
Tubby_Isaacs
Yeah, if they weren’t here, we’d be sitting in bed turning down telephone number salaries to show up at work.
Jacko
Rowdie is right. Immigrants bid down wages by being willing to work for less. Consequently employers are happy to meet that demand for lower paid jobs by paying lower wages. Of course those jobs would never be well-paid, but it’s incremental erosion of £1-£2 an hour that leads to many more jobs paying just minimum wage.
Intolerant_Liberal
Immigration is just used as a smokescreen here. The UK is a low wage economy where those at the bottom of the economic pile will always be played off against each other. Immigration is allowed for a number of reasons. They keep the wages down because the vast majority are coming here to work, they are a cheap supply of labour, and when things go wrong the government in power can subtly start blaming them for the problems many of us face when there is an economic downturn as there is now. The bankers in London who basically caused the economic meltdown in the first place, through their stupidity, greed, incompetence and selfishness didn’t get so much as a day in jail and are getting their million pound bonuses again like nothing happened, whilst the rest of us suffer. They got drunk, and we get the hangover… Such is life…