Low pay by industry
Graphs on this page:
- All the statistics below are the average for 2008 to 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.
- The sector with the largest number of low-paid employees is retail & wholesale, containing around a third 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 & restaurants, despite the high risk of low pay, account for just one in ten 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 around a quarter 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.
- The majority of men and women belonging to an ethnic minority in Wales are employed in low-paid sectors: hotels and restaurants (19% and 14% respectively); wholesale & retail trade and motor vehicles repair (both 17%) and health & social work (16% and 27% respectively). 1
- There are differences between ethnic minority groups. Over half of Bangladeshi and Chinese people in Wales are in the hotel and catering sector, whereas Indian and Black African and Caribbean are more likely to be in the health and social care sector. 2
- Public sector jobs are a particularly important source of employment for women from ethnic minorities with half of Black Caribbean and Black African women working in this sector. 3
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.
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. To improve its statistical reliability, the data is the average for the latest three years. 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.