One in five workers on low pay

One in five British workers – just over five million employees – are low-paid, finds a new report from the independent Resolution Foundation published as the national minimum wage falls in real terms for the third consecutive year.

The report, Low Pay Britain 2012, shows that the nation’s share of low-paid work has grown steadily over the past 30 years to 21% – one of the highest rates in the developed world.

Low pay is defined as being below two-thirds of the mid-point of hourly rates - and so applies to anyone who earns £7.49 per hour or less before tax, equivalent to an annual wage of £13,600 a year for a 35-hour week.

The report also calculates the numbers of people paid below the Living Wage – a different measure devised to suggest the minimum needed for “an acceptable quality of life”.

For the country as a whole, the number of workers below the Living Wage is 4.7 million - close to the total of 5.1 million defined as low-paid.

On 1st October the national minimum wage for people aged 21 and over rises to £6.19 an hour from last year’s rate of £6.08. However, adjusting for inflation, this is equivalent to £6.01 at 2011-12 prices and so represents a drop in real terms of seven pence an hour. This is the lowest rate in real terms since 2003.