Scotland
Low pay by industry
Key points
- All the statistics below are for the year 2007 and use a low pay threshold of £7 per hour.
- Both the hotel and restaurant sector and the retail and wholesale sector have a majority of workers earning less than £7 an hour. In hotels and restaurants, the proportion is 75%, two-thirds of whom are women. In retail and wholesale, the proportion is 60%, again two-thirds of them women.
- The sector with the largest number of low paid workers is the retail and wholesale sector, containing 26% of all low paid workers. This reflects both the large size of the sector and the high proportion of low paid workers within it.
- Hotels and restaurants, despite the high risk of low pay, account for just 14% of all low paid jobs.
- By contrast, such is the size of the public sector that, despite its relatively low risk of low pay, it still accounts for 22% of all those in low pay. It should be noted that these are workers who are employed directly by the public sector and does not include staff, for example engaged in cleaning, who are employed by contractors working for the public sector.
- Only a minority of low paid workers are in sectors that face international competition and the consequent threat that the job could move abroad. The jobs that are likely to be at risk in this way includes manufacturing and some parts of banking/finance, other services, and transport and communication: perhaps a quarter of all low paid jobs in total. Most low paid jobs, therefore, are low paid for domestic, rather than international, reasons.
- Note that current arrangements mean that it would be quite expensive for local public sector employers (but much less so for the public sector as a whole) to do something about the low pay of their employees. This is because, for every extra pound that the employee gains, the extra cost to the employer is around £3. This, in turn, is because the other £2 goes to HM Treasury via increased income tax and national insurance plus reduced tax credits.
- A notable aspect of the labour market experience of people from ethnic minorities is their concentration in a limited range of industries. According to a 1991 survey conducted by the Scottish Office, almost half of ethnic minority men were employed in distribution, catering, hotels and repairs – traditionally low paid sectors – compared to only one in ten of white men. Netto, G., Arshad, R., de Lima, P., Almeida Diniz, F., MaceEwen, M., Patel, V. and Syed, R., Audit of Research on Minority Ethnic Issues in Scotland from a 'Race' Perspective, Scottish Executive Central Research Unit, 2001, §7.9.
Graph 1: Risks
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Graph 2: Shares
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Definitions and data sources
The first graph shows how the proportion of workers who were paid less than £7 per hour varies by industry sector, with the data shown separately for men and women.
The second graph shows the share of workers paid less than £7 per hour by industrial sector.
Some of the sectors have been combined together for presentational purposes with the particular sectors shown being manufacturing and other production (A-F); wholesale & retail (industry code G); hotels & restaurants (H); public administration, education & health (L-N); other business activities (J-K); and other services (I & O-Q).
A low pay threshold of £7 per hour has been used. This threshold is roughly two-thirds of the Great Britain median hourly earnings and is commonly used as a threshold when analysing low pay.
The data source for both graphs is the Labour Force Survey (equivalent data from the Annual Survey Hours and Earnings not being publicly available). The data is for 2007. People whose hourly pay rates cannot be calculated from the survey data have been excluded from the analysis.
Overall adequacy of the indicator: medium. The Labour Force Survey is large, a well-established, quarterly government survey of designed to be representative of the population as a whole but there are some doubts about the reliability of its low pay data.
External links
- See the Low Pay Commission, and its third report on the National Minimum Wage
- See the HM Revenue & Customs site for information on tax credits.