Low pay by industry
Graphs on this page:
- All the statistics below are for the year 2010, are for all working-age adults, and use a low pay threshold of £7 per hour.
- The sectors with the highest risk of low pay are hotels & restaurants and retail & wholesale. Two-thirds of employees in the hotels & restaurants sector earn less than £7 per hour, three-fifths of them women. Half of employees in the retail & wholesale sector earn less than £7 per hour, again three-fifths of them women. Together, these sectors account for around two-fifths of all those earning less than £7 per hour.
- In most sectors, the majority of low-paid employees are women. The exceptions are manufacturing & other production and private sector services, which are both sectors with a relatively low proportion of jobs which are low paid.
- Thanks to its size, the public sector is also large employer of workers earning less than £7 per hour, accounting for a quarter of all such employees. 1 Just about all of these are women and just about all of them work in either education or health (including social work). 2 Very few work in administration which, indeed, has a lower proportion of its employees paid less than £7 per hour (5%) than any other industry sector.
- 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.
- Much of the low pay in the hotels & restaurants and retail & wholesale sectors is in the younger age groups. So, for example, of the 2 million workers in these sectors paid less than £7 per hour in 2010, 1 million (i.e. half) were aged under 25. By contrast, much of the low pay in the public sector is in the older age groups. So, for example, of the 1.7 million workers in the public sector paid less than £7 in 2010, only 0.5 million were aged under 25. As a result, whilst a quarter of all those earning less than £7 per hour in 2010 worked in the public sector, this proportion rises to a third for those aged 35 to 59.
- See the indicator on trends in low pay.
Why this indicator was originally chosen
Low pay is much more prevalent in some industries than in others. This is important for two reasons. First, it is only some industries which are open to global competition and most low-paid workers do not work in these industries. Second, a significant proportion of the low-paid work in the public sector where government obviously has more direct control over their pay levels.
Definitions and data sources
The first graph shows how the proportion of working-age 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 working-age employees paid less than £7 per hour by industrial sector.
The third graph shows the number of employees paid less than £7 per hour by age group and 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. In addition, in the third graph: ‘public sector and community services’ is codes O-Q plus ‘community services’; and ‘retail & wholesale plus hotels & restaurants’ is codes G plus I.
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 all the graphs is the Labour Force Survey and relates to the United Kingdom. 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.
- For a discussion of the relationship between low pay and income poverty, see the 2006 report by the New Policy Institute and the Bevan Foundation entitled Dreaming of £250 a week: a scoping study of in-work poverty in Wales and the 2004 Joseph Rowntree Foundation report entitled Low pay, household resources and poverty.
- See the Low Pay Commission site and their annual reports on the National Minimum Wage.
Relevant 2007 Public Service Agreements
None directly relevant.
|Retail & wholesale||18%||28%||47%|
|Hotels & restaurants||27%||36%||63%|
|Manufacturing and other production||13%||5%||18%|
|Private sector services||8%||7%||16%|
|Public sector: admin||2%||3%||5%|
|Public sector: education||2%||17%||19%|
|Public sector: health||4%||17%||21%|
|Retail & wholesale||28%|
|Hotels & restaurants||13%|
|Manufacturing and other production||14%|
|Private sector services||15%|
|Public sector: admin||2%|
|Public sector: education||9%|
|Public sector: health||12%|
|Industry||Age group (numbers are in thousands)|
|Manufacturing and other production||90K||160K||130K||70K||60K||70K||70K||70K||60K|
|Retail & wholesale plus Hotels & restaurants||500K||550K||310K||170K||170K||170K||180K||160K||150K|
|Private sector services||70K||170K||110K||80K||80K||80K||90K||80K||70K|
|Public sector & community services||160K||290K||190K||140K||160K||200K||210K||160K||130K|