The changing face of low pay in Britain

Pay may be considered to be ‘low’ if it is not a fair reward for work done, or if it does not provide an adequate means of subsistence. The first of these approaches implies that policy should be concerned with individual employees and their wage rates. The second suggests that the adequacy of wages should be examined in the context of total household income. This study considers both perspectives and introduces a method of combining them into a single analytical framework. For the purposes of this analysis we choose to define low pay as a gross hourly wage below two thirds of the median for all employees. On this basis, we find that around one in five employees in Great Britain was low paid in 1994–95. As expected, of these the majority were young single people or married women. However, the number of men in the 25–49 age group who were low‐paid had risen significantly since the late 1960s, while the number of low‐paid employees aged 16 or 17 dropped very dramatically over the period. Female employees were more than twice as likely as male employees to be low paid in 1994–95, but they were six times as likely as men to be low paid at the end of the 1960s. Considering pay as a means of subsistence, we find that around 13% of low‐paid employees in 1994–95 were living in household poverty, up from 3–4% at the end of the 1960s. Other than for lone parents, the benefits system is shown to have a very limited role in lifting low‐paid employees out of household poverty.