Low pay
Key points
- 470,000 jobs were paid less than the London Living Wage (LLW) in 2010, a rise of 60,000 since 2005. However, the total number of people in employment in the capital has risen and therefore the proportion paid below the LLW remains the same - 1 in 7 jobs.
- Of these, just over half were done by women, and one-third were women in part-time jobs. However, since 2005 the number of men in jobs paid below the LLW has risen by 25%, and the number of women in such jobs has risen by 8%.
- Around 20% or more of working residents in Waltham Forest, Barking & Dagenham, Brent and Newham are paid less than the living wage.
- A higher proportion of jobs in Outer London are low paid than in Inner London. Nine boroughs have more than 20% of workers employed in their borough earning less than the LLW. Tower Hamlets has the lowest proportion paid below the LLW (less than 5%).
- Nearly 50% of under 25s are paid less than the LLW. After the age of 25, the risk of low pay in London is the same for all age groups at around 14%.
- 25% of low paid jobs are in the retail sector in London. A further 20% are in hotels and restaurants. 17% of low-paid jobs in London are in the public and community sectors.
- The variation by ethnicity in the proportion of people who are low paid is striking. Black African employees are twice as likely as White British employees to receive less than the living wage. Pakistani and Bangladeshi employees are nearly three times as likely.
Find out more about Low pay by visiting the indicators in this section, listed on the right.
The income poverty indicators on this site show that the number of people living in poverty in working households in London has been rising steadily in recent years. One factor contributing to in-work poverty is low pay, which this section looks at in more depth.
Low income is measured using a widely agreed threshold of household income. No such threshold exists for low pay, but the London Living Wage (LLW) offers a very useful guide, and the Greater London Authority produces a detailed methodology for its annual calculation. The LLW was introduced in 2005, initially at £6.70 per hour. Following a series of annual rises, it was set at £8.30 in 2011.
The London Living Wage is set at a level that ensures a "decent" standard of living, assuming that relevant benefits and tax credits are also claimed. It is not mandatory for employers to pay it, unlike the National Minimum Wage, but the Greater London Authority insists that any companies bidding for work from it pay it.
Over 100 companies in London now pay the living wage. Cleaners on the London Underground are paid the living wage, as are all employees working on the Olympic site.
Topic:
Relevant Indicators
Glossary
Inner London:
Camden, Hackney, Hammersmith & Fulham, Haringey, Islington, Kensington & Chelsea, Lambeth, Lewisham, Newham, Southwark, Tower Hamlets, Wandsworth, Westminster
Outer London:
Barking & Dagenham, Barnet, Bromley, Bexley, Brent, Croydon, Ealing, Enfield, Greenwich, Harrow, Havering, Hillingdon, Hounslow, Kingston upon Thames, Merton, Redbridge, Richmond upon Thames, Sutton, Waltham Forest
In-work tax credits:
Child and Working Tax credits (CTC and WTC)
CTC is a means-tested payment for people with dependent children, whether in or out of work. However, this analysis only uses the part payable to families in-work.
WTC is a means-tested payment for working people on a low income
Adapted from http://www.taxcredits.inlandrevenue.gov.uk
Income poverty:
A household is considered to be in income poverty (or low income) if its income is less than 60% of median household income. This measure is used by the Government in its child poverty target and is in common usage across the European Union. In 2006/7, a single adult would be classed as in income poverty if his/her income was less than £112 a week (after housing costs)
Low pay:
The most commonly used threshold is 60% of median male full-time hourly earnings. This was £7.50 in 2008 and is the threshold used throughout this website.
London living wage:
Nearly 100 employers in the capital are now paying the London living wage, including Barclays, Westfield, the London School of Economics and Transport for London. It is based on a calculated 'poverty threshold wage', but with an additional 15% added to ensure a 'decent' standard of living for the recipient. In 2010, the London living wage was set at £7.85 by the Greater London Authority. More on the living wage campaign.