Research from the Living Wage Foundation shows growing problem
Our latest research report paints a concerning picture of rising low pay in the UK. Analysis of official national statistics shows that in 2024, 15.7% of jobs— that’s almost 1 in 6 , or 4.5 million jobs—were classified as low-paid, meaning they offered wages below the real Living Wage. Between 2023 and 2024, we saw the largest annual rise in both the number and the proportion of low-paid jobs since this timeseries began in 2012. This shows that a growing number of workers are earning less than what it costs them to live, and that the devastating effects of the cost-of-living crisis are still pushing many workers into poverty.
Low Pay Over Time
Looking back, the scale of low pay peaked in 2016 with 23.2 per cent of jobs paid below the real Living Wage, as seen in the graph below. From 2017 to 2019, levels of low pay fluctuated before reducing considerably from 2020 to 2022 and reaching a record low of 12.3 per cent in 2022.
A key reason for the reduction in low pay in recent years was the steady rise in the government minimum wage. The UK government initially set a target in 2019 to raise the minimum wage to two-thirds of median earnings by 2024. Though slightly delayed, this target has now been reached. These wage increases had a ripple effect; not only have they directly raised wages for those earning the NLW, but they also pushed up wages for those earning slightly more. Employers often adjust pay across different job levels to maintain fair wage gaps between staff, meaning wage increases at the bottom can lead to higher pay further up the scale.
The Cost-of-Living Crisis and Low Pay
Despite this promising trend up to 2022, the last two years have seen another uptick in the rate of low pay, with the proportion of jobs paid below the real Living Wage climbing back up to 15.7 per cent in 2024.
This is likely due in part to the profound and lasting impact of the cost-of-living crisis. While inflation began to stabilise in 2024, consumer prices surged by 21% between May 2021 and May 2024. This disproportionately affected workers on the lowest pay as they spend a greater proportion of their income on food and energy, which were hardest hit by soaring costs. These soaring costs alongside other Living Wage methodology changes have meant that the Living Wage has risen significantly to continue delivering a minimum acceptable living standard. As living costs rose and wages failed to keep up, more people fell below our low pay threshold.
Some of this shift may also be explained by the change in methodology applied to the data by the ONS from 2023 onwards, which was revised to better process data on high earners. However, revisions to the 2023 data did not significantly impact our estimates of low pay which suggests we can remain confident in our findings. You can find more detail about this in the report.
Demographic, Geographical and Sectoral Disparities in Low Pay
The prevalence of low pay isn’t uniform for all populations across the UK. Women and part-time workers continue to be disproportionately affected by low pay compared to men and full-time employees. Indeed, women were nearly 50 per cent more likely to be low paid than men and 60.8 per cent of all jobs paid below the real Living Wage were held by women in 2024, highlighting their over-representation in low-paid jobs. In 2024, part-time employees were over three times more likely to be low paid than full-time employees, with about 1 in 3 part time jobs being paid below the real Living Wage.
All nations and regions saw an increase in low-paid jobs between 2023 and 2024. Northern Ireland remained the area with the highest proportion of low pay in the UK, with 1 in 5 jobs being low paid, while Scotland remains the area with the lowest level of low pay at 11.4 per cent.
Industries also show significant variation in low pay levels. While they all experienced a rise in low-paid jobs, the hospitality industry remains the worst affected, with nearly half of its workers earning below the real Living Wage. The wholesale and retail sector has the highest number of low paid jobs due to its large size, with over a million low paid jobs in 2024.
Why Do Low Pay Figures Differ Between the LWF and ONS?
You may notice that our findings on low pay in 2024 differ from those in the ONS’ low pay briefing. This is because we use different measures—the ONS defines low pay as jobs paid below two-thirds of median hourly earnings (the same measure the government used to set its 2019 target), while we use the real Living Wage as a benchmark. It is worth noting that, since the government has reached its low pay target, in April 2024 the ONS’ low pay threshold of two-thirds of median hourly earnings was £11.39 per hour, five pence below the government minimum wage (£11.44 per hour).
It’s encouraging that fewer jobs now fall below the two-thirds median earnings threshold, and that this measure of low pay is at a record low. However, this does not mean the issue of low pay is solved.
The real Living Wage is the only wage rate based solely on living costs and provides a more comprehensive measure of what workers need to earn based on public consensus. Given the steep rise in the cost of living in recent years, it is more important than ever to use this more appropriate measure of low pay — and to consider the fact that more workers are falling short of a wage that supports a decent standard of living.
Conclusion
Our findings show that low pay remains a significant issue facing the UK labour market, and that workers need a wage that reflects the increased cost of living. Without this, millions of workers will continue to struggle to make ends meet, despite being in work.
While recent increases to the government’s minimum wage are encouraging, they do not mean low pay has been solved – far from it. The real Living Wage is the only wage rate that is solely based on a robust calculation of the cost of living. Accrediting as a Living Wage Employer is a practical step employers can take to provide their workers with a wage that will allow all their workers to live with dignity.
Read the full report.
