Calls for higher standards for low paid workers
The think tank says that although minimum wage rises mean Britain now has one of the highest wage floors in the world, minimum wage workers typically only receive a tenth of their normal earnings if they fall sick for a week.
It says that raising minimum standards alongside the minimum wage should be the focus of a ‘good work’ strategy for the decade ahead.
The Resolution Foundation report Low Pay Britain 2023 – the 35th report of The Economy 2030 Inquiry, funded by the Nuffield Foundation, examines the issues that matter to low earners, from inadequate sick pay and unpredictable hours, to the lack of autonomy and flexibility at work.
The report notes the huge success of the National Living Wage (NLW) in halving levels of low pay: the rise from £6.70 an hour in 2015 to £9.50 an hour in 2022 means that 20.7% of workers were low paid in 2015, compared to 9% in 2022.
Sustained increases mean that only France, New Zealand and Korea have higher minimum wages than the UK, and that Britain is on course to eliminate hourly low pay by the middle of the decade.
But the Resolution Foundation says Britain remains behind many of its peers when it comes to wider minimum standards at work. Statutory Sick Pay (SSP) is just £109.40 per week, lagging behind the minimum protection levels in almost all other OECD countries. Combined with the three-day waiting period this means a full-time minimum wage worker would receive just £43.76 for a week of sickness, to compensate for lost earnings of £390.
The Resolution Foundation says low SSP is especially damaging for low earners because they are more likely to rely on it. The Foundation notes that four in 10 private sector employees earning below £20,000 expect to only receive SSP if they are sick for a week, compared to fewer than one in 10 earning above £50,000.
The Foundation said this is part of a wider pattern of lower earners lacking protections or flexibilities that higher earners take for granted.
Low earners are more than twice as likely as high earners to say they have little or no autonomy at work (38 vs 15%), and four times as likely to experience volatility in their hours and pay (22 vs 6%).
The majority (56%) of workers earning less than £20,000 say they would expect not to be paid if they unexpectedly missed a day of work due to a family emergency, compared to just one in 10 (12%) of workers with incomes over £60,000.
The need to raise minimum standards
In the future, the Foundation says that a renewed “good work” agenda should seek to raise minimum standards as well as the minimum wage.
Its proposals include continuing the current pace of National Living Wages rises in the next parliament – this would see it reach 73% of typical earnings, or £13.12 an hour, on current forecasts, by the end of this decade.
The think tank is also calling for “proper sick pay” which would take the form of an earnings replacement approach, where SSP is paid at 65% of a worker’s usual earnings.
Another proposal is for workers to have more certainty and control, including new rights to a contract reflecting the hours a worker usually works, at least two weeks’ advance notice of shifts, and compensation for late changes.
Nye Cominetti, senior economist at the Resolution Foundation, said: “We should celebrate the progress that Britain has made on tackling low pay thanks to the National Living Wage, while recognising that we have a long way to go on job quality.
“Too many low earners suffer from poor quality work, be it from inadequate sick pay or unacceptable uncertainty about when they will be expected to work.
“Too often work means very different things to lower and higher earners. Not enough of the former enjoy the basics of dignity, respect and security that the latter take for granted.
“That’s why we need a new ‘good work agenda’ that goes beyond a higher minimum wage so that workers see improvements to the quality of their jobs as well as the size of their pay packets.”