Proposal: a new settlement for the low paid

Beyond the minimum wage to dignity and respect.

In a briefing paper published recently the Resolution Foundation sets out a significant yet achievable programme of change across five areas that, taken together with a higher minimum wage, would amount to a new settlement for Britain’s low-paid workers.

At its core is the idea that improving the circumstances of low-paid labour is not just about a higher price tag for that labour, but about showing respect to and providing dignity for the people doing it.

Who has control of decisions, or whether low-paid workers are treated in a similar way to higher-paid ones, are central questions that we should pay attention to.

Overall, there were 4.2 million people on low pay – below two-thirds of median hourly earnings – in 2019, of whom almost 2 million were paid near or below the National Living Wage (NLW).

Women were more likely to be in low pay: 19 per cent of women were being paid below two-thirds of the median compared to 12 per cent of men.

This is partly, though not entirely, linked to women being more likely to work part time – although some 36 per cent of part-time men are low paid.

And women are twice as likely as men to be – often low-paid – key workers, facing the biggest health risks in this crisis.

There are significant concentrations of low pay in specific sectors.

Some of the sectors with the highest rates of low pay – hotels and restaurants (where 52 per cent of the workforce is low-paid) and wholesale and retail (28 per cent) – are those that have suffered the most from social distancing measures (with the exception of food retail).

A new settlement for the low paid should include:

Higher wages:

Post-crisis, further increases in the minimum wage should continue, subject to the advice of the Low Pay Commission, with the aim of abolishing low pay by the middle of this decade by raising the National Living Wage to two-thirds of typical hourly pay.

Control of working hours:

Workers should have a right to a contract that reflects the actual hours they work; two weeks’ advance notice of work schedules; and compensation where shifts are cancelled or changed without reasonable notice. And part-time workers should have a right to request a contract with longer hours.

Control of when you are paid:

Workers in large firms should have the right to choose how regularly they are paid, and workers should be involved in decisions about payroll regularity even in smaller employers.

The rights at work that higher earners take for granted:

Sick pay should be extended to lower earners; and workers should qualify for protection against unfair dismissal after one year in post.

Labour market rules actually enforced:

The forthcoming Single Enforcement Body should be introduced and properly resourced, with powers to pro-actively protect workers.

Fines for underpayment of the minimum wage should be increased.

Particularly during this pandemic, local authorities should be resourced to carry out health and safety spot-checks to protect lower-paid workers bearing most health risk.

Institutional innovation to drive up standards:

Unions should be given the right to enter workplaces to raise awareness among workers.

21st century Wage Boards should be established in a small number of industries in clear need of improved standards, starting with social care.

Social care workers, who have been on the front line of this crisis, are particularly likely to be paid below the real Living Wage. In this case, the public sector has a direct role to play.

Although only a minority of care workers are employed in the public sector, social care is heavily reliant on public funding, and it is the failure to provide sufficient funding that has led to close to three-in-five care workers being paid below the real Living Wage.

This paper also sets out a significant yet achievable programme of change across five additional areas, that, together with a higher minimum wage, would amount to a new settlement for Britain’s low-paid workers.

At its core is the idea that improving the circumstances of low-paid labour is not just about a higher price tag for that labour, but about showing respect to and providing dignity for the people doing it.

Who has control over matters such as hours worked or the nature of employment contracts, or whether low-paid workers are treated in a similar way to higher-paid ones, are central questions that we should all pay attention to.

To read the full report, click here.