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‘Worrying’ rise in number of people being paid below minimum wage, study finds

Ben Chapman
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‘Worrying’ rise in number of people being paid below minimum wage, study finds

A “worrying” number of workers are being paid less than the minimum wage despite government efforts to name and shame offending employers.

A new study by the Low Pay Commission found that 439,000 people in the UK were paid less than the legal minimum in April 2018 – up 30,000 on the year before.

Women were still more likely to be paid below minimum wage, which stands at £8.21 for workers aged 25 and over and £7.71 for those between 21 and 24.

Childcare had the highest rate of underpaid workers, followed by hospitality, retail and cleaning.

Partly thanks to better funding, HM Revenue and Customs has identified a record number of workers as underpaid, said the commission. Fines against employers also increased but the number of cases opened and closed was flat year-on-year.

Labour and the Conservatives have pledged to further increase the minimum wage to £10 and £9 respectively, but critics warn that any rises will be ineffective if they are not enforced.

The real living wage, which is calculated by an independent body and represent the minimum needed for a basic standard of living, is £10.55 in London and £9 per hour in the rest of the UK.

Bryan Sanderson, who chairs the Low Pay Commission, said the news analysis revealed that a “worrying number” of people are being paid less than the minimum wage.

“We recently celebrated 20 years of the minimum wage – it has raised pay for millions of workers, but it is essential that people receive what they are entitled to,” he said.

“It is also vital for businesses to be able to operate on a level playing field and not be illegally undercut on wages.”

While the government has made “real progress” on enforcement, more needs to be done to ensure employers comply in the first place and workers know how to enforce their rights, Mr Sanderson said.

Nye Cominetti, economic analyst at the Resolution Foundation, said: “The national living wage has delivered a welcome pay boost to millions of low-paid workers, but rising non-compliance risks undermining its success.

“A higher minimum wage inevitably increases the pressure for non-compliance, which is why enforcement should be expanded too. Welcome steps have been taken in that direction, but this work shows more needs to be done.”

A government spokesperson said: “It is illegal not to pay the minimum wage and we are cracking down on employers who fail to pay the national minimum wage and national living wage.

“We have almost doubled HMRC’s budget to £26.3m since 2015, ensuring it has the resources needed to investigate employers who break these rules.

“HMRC has collected £15.6m of underpayment for over 200,000 workers and issued £14.1m in financial penalties to employers that breached the rules – the highest amount ever.”