Low pay

Workers paid below the London Living Wage

Date 31 August 2017
Date updated 25 February 2019
Overview

The relationship between poverty and low pay is complicated. Low pay alone does not necessarily mean poverty – there are other factors, such as the amount of in-work benefits received by the family, the income of a partner or other family members, family size and housing costs, which are particularly important in London. 

The focus of these indicators is identifying who is likely to be low-paid and therefore potentially at increased risk of being in poverty. The term low pay is used to mean anyone paid below the London Living Wage. 

The London Living Wage is calculated independently in relation to living costs. This is different from the mandatory National Living Wage, which is currently £7.83 per hour for workers aged over 25. The London Living Wage rate for 2016/2017 is £9.75 an hour, with earlier years using previous rates (listed here). The rate for 2017/18 is £10.20. On each graph, you can click 'show graph details' to see the date and source of the data used.

People who are BAME are more likely to be low paid, especially people from Bangladeshi or Pakistani origin, and women are more likely to be low paid than men (although low paid workers who are full-time are more likely to be men). 21% of employed Londoners are paid below the London Living Wage, which is the same as last year's figure. 18% of jobs in London are low paid (including part time jobs). Nearly 64% of jobs in the hospitality sector pay below the London Living Wage – by far the highest of any industry. The next highest rate is in retail and wholesale, where 41% of jobs are low paid.

Low pay: Indicators

Low paid residents by borough

This graph shows the proportion of employees in each borough who are low paid. The overall proportion of jobs held by employees living in London that were low paid over these two years was 22% (730,000 low-paid residents); 19% (260,000) in Inner London and 24% (470,000) in Outer London. However, there was much variation between the boroughs, with these proportions ranging from 11% for Richmond upon Thames to over 30% for four boroughs. Taking the ten boroughs with the highest proportions of residents who were low-paid, eight were in Outer London. 

In 2017/18, as in previous years, Newham had the highest proportion of residents who were low-paid at 32% (36,000 low-paid residents), though it has seen its low pay rate fall over the last few years. Brent, Enfield and Barking & Dagenham were all next at 31%. Brent had t…

Low pay by borough workplace 2018

This graph shows the proportion of jobs in workplaces in each borough that are low paid, regardless of where the employees doing those jobs live. The overall proportion of jobs in workplaces paid below the London Living Wage in London is 19.3%, or 790,000 low-paid jobs. Jobs based in London are less likely to be low paid than the jobs worked by employees living in London. The figure for Inner London is 13% (360,000 low-paid jobs) and for Outer London it is 30% (420,000). The lower proportion for Inner London reflects the large business districts such as the City and Canary Wharf, with highly paid jobs often taken by commuters. 

Tower Hamlets and Islington have the lowest proportion of low-paid jobs at 11% each (26,000 and 21,000 low-paid jobs respectively). This is followed by Westminster (12%) and Camden (13%). These are all Inner London…

Low pay by ethnicity

The proportion of employees of each ethnic group that are paid below the LLW and the share of low-paid employees that this represents.

Low pay rates vary substantially among ethnic groups. The low pay rate for Bangladeshi and Pakistani employees, at 46%, is more than double the rate for White British employees at 19%. Those from Other ethnic groups and Black/African/ Caribbean/Black British have the next highest rates of low pay, at 37% and 35% respectively. 

The ethnic make-up of the working-age population means that the low-paid workforce as a whole looks different from what the numbers above might suggest. The largest group of low-paid workers are White British who make up 34% (310,000) of the low paid. This is a reduction on several years ago and the last London Poverty Profile report, which reflects that the proportion of employees wh…

Low pay by industry

The proportion of employees in each industry who are paid below the LLW and the share of low-paid employees that this represents. 

Some sectors have a much higher proportion of low-paid jobs than others. The proportion of employees who are low paid is extremely high in the hospitality sector (hotels and restaurants) at 64%. The industry with the second highest proportion of low paid workers is retail and wholesale at 41%. Transportation and storage and private sector services* have the lowest proportion of employees who are low paid, at 4% and 10%. Some private sector service jobs are well paid such as financial and insurance activities and professional, scientific and technical activities, while some are generally less well paid, such as administrative and support work. 

Overall there are a large number of jobs in retail and wholesale, so…

Low pay by disability

The low pay rates for disabled and non-disabled people by full-time or part-time work and by level of education. In all cases disabled people are more likely to be low paid: 37% of disabled people compared with 27% of non-disabled people. The difference between the low pay rate for disabled and non-disabled adults is smaller for full-time employees than for part-time employees. Of those who are working full-time, 25% of disabled people are low paid compared with 19% of non-disabled people, a six percentage point difference. However, of those who are working part-time 62% of disabled people are low paid compared with 54% of nondisabled people.* This is an eight percentage point difference. 

The pattern is the same when looking at education. Of those with A-levels or above 25% of disabled people are low paid compared with 20% of non-disable…

Real weekly earnings - London

The proportion of employees by real gross weekly earnings category. This means that weekly earnings have been adjusted for inflation (using CPIH)* so that it is possible to compare weekly earnings in 2016 with those 10 years ago in 2006. This graph includes both part-time and full-time employees. Part-time employees are generally concentrated towards the bottom of the weekly earnings distribution, due to both fewer hours of work and lower average hourly pay rates. In 2016 in London the median for all employees was £537 and for England –including London – the median was £442.

In 2016 in London, there was a smaller proportion of employees earning more than £600 than in 2006, and there has been an increase in the proportion of employees earning less than £600. This is also true in the rest of England but the change has been less marked.

57% –…

Low-paid men and women

The number of low-paid jobs by whether they are part-time or full-time and by whether they are held by men or women. In 2016 the biggest group among the low paid were female part-time employees at 220,000, or 31% of the total. Male full-time jobs were the next biggest group (200,000, 27%), followed by female full-time jobs (170,000, 24%). The smallest group with just under a fifth of the total (130,000, 18%) were male part-timers. 

The number of low-paid jobs increased over this period by 250,000. There was an increase in the number of low-paid jobs across full- and part-time work for both sexes. The increase in low-paid jobs has not been evenly distributed across the groups shown in the graph, however. The overall increase in the number of low-paid workers between 2011 and 2016 was 52%. For full-time men the increase was 61%, for full-ti…

Low pay by qualification

The proportion of workers who are low paid by qualification level comparing 2011 with 2016. The risk of low pay for employees is lower for those with higher levels of qualifications. In 2016 just over 1 in 10 (13%) employees with a degree or equivalent were low paid whereas for those with no or unknown qualifications the proportion was 7 out of 10 (71%). Those with a degree or equivalent are by far the largest group of employees, they alone are more than half (55%) of all employees. So although this group has a low proportion of low-paid employees, they account for 260,000, 27%, of low-paid employees. Those with no or unknown qualifications only account for 3% of total employees and makeup 9%, 120,000, of those who are low paid. 

The proportion of workers who were low paid increased for those at every educational level between 2011 and 20…

Regional pay inequalities

This graph looks at gross weekly earnings across the regions of England, at the bottom 10% and the top 10%, and the ratio between these. It also features the ratio for just full-time jobs.

In 2016, a job at the bottom 10% paid £166 per week, compared with £1,190 for a job at the top 10%. This gives a ratio of 7.2, i.e. earnings towards the top of the labour market are 7.2 times higher than those towards the bottom. This is below the ratio for the South East and East of England: in these regions, pay at the top is lower than in London, but pay at the bottom is disproportionately low relative to this.

The inequality between the bottom and top 10% is less pronounced if we examine only full-time jobs. London is also the most unequal region on this basis, with a full- time job at the top 10% paying 3.8 tim…

Change in pay across the distribution

This graph examines the change in pay at the bottom 10%, top 10% and middle of the earnings distribution for all jobs after inflation, measured using the CPIH.* The most notable feature across England between 2011 and 2016 is the strong growth in weekly pay at the bottom of the earnings distribution.

In London, earnings at the bottom 10% increased by 10% over this five-year period after inflation. In contrast, earnings at the median fell by 4% and earnings at the top 10% fell by 6%. London was the only region in England to have falling pay at the middle of the distribution, and also had the largest fall at the top. The region with the closest experience to London over this period was the South East, which had the second largest fall at the top 10% at 4%, and largely unchanged real median earnings.

This period inc…

2018 LOW PAY BY RESIDENCE OVER TIME

This graph shows the proportion of full-time, part-time, and all jobs that are held by Londoners and are paid below the London Living Wage over time. The most recent London Living Wage is £10.20 an hour. This graph assesses whether people are low paid or not based on their hourly earnings.

In 2018, just over one in five employees (22.5%) were low paid. This is an increase on 2017 and follows two years in which the proportion of Londoners who are low paid has fallen. The proportion of Londoners who are low paid has now increased back to the levels seen before the introduction of the government’s ‘National Living Wage’ in 2016.

The number of Londoners paid below the London Living Wage was 760,000 in 2018, an increase of 60,000 on 2017 and the highest number of low-paid employees recorded.

Previously, between 2010 and 2015, there had be…

2018 WORKPLACE LOW PAY TIME SERIES

This graph shows the proportion of full-time, part-time, and all jobs that are paid below the London Living Wage and are based in London. Jobs based in London are not necessarily undertaken by London residents – for example, many well-paid jobs in London are worked by those who commute into the city.

In 2018, the proportion of jobs based in London that were low-paid was 20%, around 820,000 jobs. This figure was 12% (400,000) for full-time employees and 47% (400,000) for part-time employees. These figures do not sum due to rounding. 

This represents a one percentage point increase from 2017, and means the proportion of jobs in London paid below the London Living Wage is now higher than it has ever been. Between 2015 and 2017 the rate did not change and remained at 19%. Before this there were several years of steep increases: between 2010 an…

Change in weekly earnings in London and England

This graph shows the percentage increase in real weekly earnings between 2015 and 2017, using September 2017 prices for the pay distributions in London and England. This covers the period just before and after the introduction of the government’s National Living Wage in April 2016. The figures are for London residents.

Weekly earnings growth has been strongest at the bottom of the distribution in both London and England. The employee at the bottom 10% and bottom 20th of the distribution in London earned 5% and 7% more respectively in 2017 compared with 2015. In England as a whole, these figures were 7% and nearly 6% respectively.

The increases in weekly earnings are generally lower the further up to the distribution in London. Earnings increased by 1.4% at the median in London, compared to 1.7% in England.

London has seen stronger r…

Change in low pay (over 3 years)

This data compares the proportion of workers who were low paid in 2015-16 as a two year average and those who were low paid in 2017-18 as a two year average. It shows by how many percentage points this figure has changed.

Pay inequality

This graph shows pay inequality in each London borough by comparing the ratio of top and bottom pay. It compares gross hourly pay for the top 20% with the bottom 20% in each borough. The higher the pay ratio, the more unequal earnings are in that borough.

The pay ratio in Tower Hamlets is 3.33, significantly higher than any other borough. This means that in Tower Hamlets someone just in the top 20% has pay 3.33 times higher than someone just in the bottom 20%. Hounslow has the next highest ratio, with 2.88, followed by Westminster with 2.76. Therefore in these boroughs, hourly pay for the top 20% of earners is much higher than for the bottom 20%.

The most equal borough by this measure is Croydon, where the pay ratio is 2.29, followed by neighbouring Merton where it is 2.31, and Wandsworth where it is 2.33.

The difference between bor…