Low pay by industry

Graphs on this page:

Supporting information:

Key points

  • All the statistics below are for the year 2010 and use a low pay threshold of £7 per hour.
  • Both the hotel & restaurant sector and the retail & wholesale sector have a majority of employees earning less than £7 an hour.  In both cases, around two-thirds of these people are women.  Together, these sectors account for almost half of all those earning less than £7 per hour.
  • The size of the public sector is that, despite its relatively low risk of low pay, it still accounts for around a fifth of all those in low pay.  Just about all of these are women and just about all of them work in either education or health (including social work).
  • Only a minority of low-paid employees 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 private sector services: 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.

Definitions and data sources

The first graph shows how the proportion of employees 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 employees paid less than £7 per hour by industrial sector.

Of the 21 Standard Industrial Classification (SIC) 2007 industry sectors, some have been combined together for presentations purposes: ‘manufacturing and other production’ is industry codes A-F; ‘private sector services’ is codes H plus J-N; and ‘community services’ is codes R-S.

A low pay threshold of £7 per hour has been used.  This threshold is roughly two-thirds of UK 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.  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.