Minimum wage rises mean Britain now has one of the highest wage
floors in the world but remains an international laggard on wider
minimum standards, with minimum wage workers receiving only a
tenth of their normal earnings if they fall sick for a week.
Raising minimum standards alongside the minimum wage should be
the focus of a ‘good work’ strategy for the decade ahead,
according to new research published today (Wednesday) by the
Resolution Foundation.
Low Pay Britain 2023 – the 35th report of The
Economy 2030 Inquiry, funded by the Nuffield Foundation –
examines the progress made on reducing low pay across Britain,
and the lack of it on other issues that matter to low earners,
from inadequate sick pay and unpredictable hours, to the lack of
autonomy and flexibility at work.
The report notes the huge success of the National Living Wage
(NLW) in halving levels of low pay: the rise from £6.70 an hour
in 2015 to £9.50 an hour in 2022 means that 20.7 per cent of
workers were low-paid in 2015, compared to 9 per cent in 2022.
Sustained increases mean that only France, New Zealand and Korea
have higher minimum wages than the UK, and that Britain is on
course to eliminate hourly low pay by the middle of the decade.
But Britain remains behind many of its peers when it comes wider
minimum standards at work. Statutory Sick Pay (SSP) is just
£109.40 per week, lagging behind the minimum protection levels in
almost all other OECD countries. Combined with the three-day
waiting period this means a full-time minimum wage worker would
receive just £43.76 for a week of sickness, to compensate for
lost earnings of £390.
The paucity of SSP is especially damaging for low earners because
they are more likely to rely on it. The Foundation notes that
four-in-ten private sector employees earning below £20,000 expect
to only receive SSP if they are sick for a week, compared to
fewer than one-in-ten earning above £50,000.
The Foundation notes that this is part of a wider pattern of
lower earners lacking protections or flexibilities that higher
earners take for granted.
Low earners are more than twice as likely as high earners
quintile to say they have little or no autonomy at work (38 vs 15
per cent); four times as likely to experience volatility in their
hours and pay (22 vs 6 per cent).
The majority (56 per cent) of workers earning less than £20,000
say they would expect not to be paid if they unexpectedly missed
a day of work due to a family emergency, compared to just
one-in-ten (12 per cent) of workers with incomes over £60,000.
Going forwards, the Foundation says that a renewed ‘good work’
agenda should seek to raise minimum standards as well as the
minimum wage. Proposals include:
-
A higher wage floor: continuing the current
pace of NLW rises in the next parliament would see it reach 73
per cent of typical earnings, or £13.12 on current forecasts,
by the end of this decade.
-
Proper sick pay: an earnings replacement
approach, where SSP is paid at 65 per cent (matching typical
OECD rates) of a worker’s usual earnings.
-
More certainty and control: new rights to a
contract reflecting the hours a worker usually works, at least
two weeks’ advance notice of shifts, and compensation for late
changes.
As with previous minimum wage rises, these changes would make it
more expensive for firms to use low-paid labour. The Foundation
proposes a widening of the Low Pay Commissions remit to monitor
any impact from this ‘good work agenda’ on employment.
The Foundation says that the trade-offs involved need to be part
of a wider economic strategy to raise growth and lower
inequality, with the benefits concentrated amongst poorer, and
the costs amongst richer, households.
Generally lower paying hospitality and leisure jobs comprise a
quarter of employment in poorer households, compared to just a
tenth among the richest households. Meanwhile richer households
spend 35 per cent of their budgets on hospitality and leisure,
compared to 23 per cent amongst poorer households.
Nye Cominetti, Senior Economist at the Resolution
Foundation, said:
“We should celebrate the progress that Britain has made on
tackling low pay thanks to the National Living Wage, while
recognising that we have a long way to go on job quality.
“Too many low earners suffer from poor quality work, be it from
inadequate sick pay or unacceptable uncertainty about when they
will be expected to work.
“Too often work means very different things to lower and higher
earners. Not enough of the former enjoy the basics of dignity,
respect and security that the latter take for granted.
“That’s why we need a new ‘good work agenda’ that goes beyond a
higher minimum wage so that workers see improvements to the
quality of their jobs as well as the size of their pay packets.”
