Working Paper 59: Low Pay in London

Increasingly low pay has become a factor in poverty. This paper looks at the incidence of low pay in London, concentrating on four sectors: cleaning; retail; social care; and hospitality and catering. As well as cross sectional data, the work analyses data on the same people over time, permitting analysis of the persistence of low pay and of whether some categories of employees are particularly vulnerable. The work was done to support the London Assembly’s Economy Committee investigation into low pay in London It analyses statistics requested by the Economy Committee from the Office for National Statistics (ONS) as part of the investigation.

Part-time employees are much more likely to be low-paid than full-time employees – the paper finds that median hourly pay for part-time workers has been persistently below the ‘low pay’ level suggested by the Assembly’s Economy Committee. Since 1997 the proportion of employees in the social care sector in low pay has been between 40 and 50 per cent. For the retail sector, the proportion has been even higher at 50-60 per cent. For the hospitality and catering sector the proportion in low pay has been higher still at 60-70 per cent and for the cleaning sector, between 75 and 85 per cent of employees have been in low pay.

The analysis also examines the persistence of low pay, defined as three years in low pay in any of these four year periods: 1997-2000, 2001-2004, 2005-2008 and 2009-2012. Possibly encouragingly, the proportions in all ‘low pay’ sectors in persistent low pay are much smaller than those on low pay for just one year in any four-year period. On the other hand, a significant proportion of those in low pay for three years in any four year period remains in low pay for the fourth year.