Millions of workers in Britain snared by low-pay trap

Three in four people on low wages in 2002 failed to escape from Britain’s “low pay trap” over the next 10 years, according to a report published today.

According to Resolution Foundation think-tank, 1.3 million (27 per cent) of the 4.7 million workers on low pay in 2002 remained in the bottom bracket for the next 10 years.

A further 2.2 million (46 per cent) moved in and out of low wages but failed to break free of them for good by the end of the decade.

The findings will fuel the growing concern about the lack of social mobility in the UK and the heated political debate about the “cost of living crisis”.

In a Commons debate today, Labour will highlight figures showing that average earnings have fallen in real terms in every part of the UK since 2010.

Labour will claim that the Coalition has failed to meet the goals it set itself on living standards, economic growth and the deficit.

Only 800,000 (18 per cent) moved up the earnings ladder for a sustained period without slipping back into low pay. A further 400,000 (9 per cent) retired or left the labour market. Low pay was defined as two-thirds of median hourly earnings – £7.32 and £10.98 respectively at today’s prices.

Alex Hurrell, senior analyst at the foundation and author of the report, said: “For many people, low pay is not a first rung on the ladder – it’s a long-term or even permanent reality. Identifying those who are least likely to escape low pay is the first step in targeting policies to help them get on.”

Researchers found women were much more likely to be stuck on low pay than men.

Some 900,000 women (33 per cent) on low wages in 2012 had been there for the previous 10 years, compared to 400,000 men (21 per cent).

The North-east was the region where workers were most likely to be trapped on low earnings. One in three (34 per cent) in this category in 2012 had been there for a decade.

The East Midlands, Yorkshire and Humberside and Wales (31 per cent) were the next worst affected. London and the South-east were the least affected, although 23 per cent of the low paid in 2012 had been stuck for 10 years.

Half of all the workers trapped for the decade were aged between 41 and 60, which means they spent up to 10 of their “peak earning years” on low pay. Some may remain stuck for their entire careers, the foundation said.

Public-sector workers were more likely to escape low pay than those in the private sector. Women, manual workers, administrators and staff of firms with fewer than 10 staff were least likely to escape.

The sectors where people were most likely to be stuck included retail, hospitality, sales, customer services, manufacturing and care. The foundation said more must be done to help workers progress.

Only one in six women (15 per cent) working in the retail sector in 2002 escaped low pay during the decade.

Gavin Kelly, the think-tank’s chief executive, said: “Living on low pay in 2013 is tough, but being stuck on it for years on end is harder still.

“This report shines a light on the persistent nature of low pay for millions of workers and shows that women, those in regions such as the North-east, the East Midlands and Wales, and people working in sectors like administration are far likelier to be stuck in low pay than others.

“It also highlights the large numbers who cycle in and out of low pay over time.

“Limited earnings mobility is a long-running problem in our economy which spans a number of decades and has occurred under governments of different complexions.”

Chris Leslie, the shadow Chief Treasury Secretary, said: “On every economic test David Cameron and George Osborne set themselves three years ago they have failed.

“Far from delivering rising living standards, working people are now over £1,600 a year worse off under this Government.”

In the debate today, ministers will point out that the problems of low pay pre-date the Coalition coming to power in 2010 and will accuse the previous Labour government of failing to tackle it.