1 in 5 Londoners low paid - new figures

New analysis by Trust for London and New Policy Institute ahead of Living Wage Week (5th-11th November) reveals levels of earnings growth and patterns of low pay in London.

Changes in weekly earnings in London and England

Weekly earnings growth has been strongest amongst those with the lowest incomes in both London and England. Employees in the bottom 10% and bottom 20% of earners in London saw wage growth of 5% and 7% respectively in 2017 compared with 2015. In England as a whole, these figures were 7% and nearly 6% respectively. The increased growth at the bottom is partly due to the increase in the government’s national living wage from £7.20 in 2016 to £7.50 in 2017.  

London has also seen stronger real earnings growth amongst top earners. For the 10% of earners, real earnings grew by 3.4% in London, compared with 1.4% in England. 

The increases in average weekly earnings (median) are lower in London – 1.4% in London, compared to 1.7% in England.

Low-paid employees

In 2017, just over one in five employees (21%) in London were low paid, effectively unchanged on 2016 and a 1.5 percentage point decrease since 2015.

This is only the second year since 2005 with no increase in the proportion of employees paid below the London Living Wage (LLW) of £9.75 per hour. Previously, between 2005 and 2010, there had been sharp increase in low pay, from 14% to 22%. The number of low paid employees has remained the same at 690,000 in both 2016 and 2017.

The London Living Wage, which reflects the cost of living, has been increasing more quickly than median earnings for the last few years. For both 2016 and 2017 the proportion paid below the LLW has not increased. This is despite a nearly 4% increase in the LLW in November 2016 from £9.40 to £9.75.

Outer London had a much higher incidence of low pay than Inner London – almost 30% compared to 14%. This is an increase in Outer London of 1.6 percentage points since 2016.

Commenting on the figures Mubin Haq, Director of Policy and Grants at Trust for London, said:

“The main difference between London and England is amongst top earners. Those in the top 10% in London have seen wage growth of more than double the rate of top earners in England.

“At the other end of the spectrum, the introduction of the national living wage has increased earnings at the bottom. Whilst this is welcome, this has not been enough to shift the numbers of Londoners who are low paid. This remains persistently high, with 1 in 5 Londoners being low paid.

“With the new Living Wage rates being announced next week, the evidence shows that a step change in low pay can only be achieved if those at the bottom get a larger increase in their wages.”

Our latest data on low pay and earnings is available here