By Klervi Mignon, Research Officer at the Living Wage Foundation
At the Living Wage Foundation, we recently published our annual snapshot of the scale of low pay in the UK – and the findings are concerning. Our analysis of official national statistics found that in 2024, 15.7 per cent of jobs were classified as low-paid. That’s almost 1 in 6, or 4.5 million jobs, paid below the real Living Wage. From 2023 to 2024, we saw the largest annual rise in both the number and the proportion of low-paid jobs since the data series began in 2012. This suggests that a growing number of people are earning less than what it costs them to live, pushing more people towards in-work poverty.
A note on terminology: the real Living Wage is the only UK wage rate based solely on the cost of living. It is distinct from – and higher than – the government’s statutory minimum, called the National Living Wage. The real Living Wage is voluntarily paid by over 15,000 employers committed to raising employment standards and it is currently £12.60, and £13.85 in London.
The cost-of-living crisis has reversed a promising trend
Looking back, rates of low pay in the UK peaked in 2016, fluctuated between 2017 and 2019, and then dropped considerably from 2020 – reaching a record low in 2022. This decline was largely driven by the steady rise in the government minimum wage. In 2019, the government set itself a target to raise the minimum wage to two-thirds of median earnings, which was achieved this April. This uplift helped low paid workers directly and also pushed up wages for those earning slightly above that level. This is because employers often adjust pay across job levels to maintain fair wage gaps between staff – which means wage increases at the bottom can lead to higher pay further up the scale.
However, this promising trend reversed after 2022, with low pay rising again over the past two years. A major driver for this is likely the long-lasting impact of the cost-of-living crisis. Despite inflation stabilising in 2024, consumer prices remained over 20 per cent higher than in 2021. These soaring costs disproportionately affected workers on the lowest pay, who already spend a greater share of their income on food and energy. As living costs rose and wages failed to keep up, more people fell below our low pay threshold, earning less than what it costs them to live.
Low pay affects some more than others
Low pay doesn’t affect everyone equally, and varies across demographics, regions, and sectors. Women and part-time workers are disproportionately affected; in 2024, women were nearly 50 per cent more likely to be low paid than men, and part-time workers were over three times more likely to be low paid than full-time workers.
Low pay rose across all UK nations and regions in 2024, and across every sector. Northern Ireland continued to have the highest share of low-paid jobs (1 in 5), while Scotland had the lowest (about 1 in 9). The hospitality sector had the highest proportion of low-paid jobs – nearly half earning below the real Living Wage, marking the 13th consecutive year of this trend. The wholesale and retail sector had the largest number of low-paid jobs, with over one million jobs earning below the real Living Wage. The unequal impacts of low pay matter because they risk reinforcing existing patterns of inequality.
It doesn’t have to be like this
These findings make one thing clear: low pay remains a significant issue in the UK labour market. Recent increases to the government’s minimum wage are welcome, but they haven’t solved low pay. The real Living Wage is the only wage rate that is solely based on a robust calculation of what workers need to earn to live with dignity. Our research shows that if just 25 per cent of low paid workers in the UK were uplifted to a real Living Wage, this increase in wages would boost productivity and spending to deliver £1.2 billion back into the UK economy. This means the real Living Wage can help revitalise local economies by tackling in-work poverty and ensuring everyone earns enough to live with dignity.
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This article is featured in our 7 May newsletter.
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