Key points

  • The only data on low pay over time is a series of estimates published by government.  Currently, these estimates only provide breakdowns for the age groups 18-21 and 22+.
  • In 2010, around 1.1 million 18- to 21-year-olds were paid less than £7 per hour.  This is two-thirds of all the employees in this age group and is a much higher proportion than that for older workers.
  • Around half of those earning £7 per hour were men and half were women.  More generally, the distribution of pay rates for men aged 18 to 21 is similar to that for women.
  • Using a relative low pay threshold which rises in line with average earnings and was £7 per hour in 2010, the proportion of 18- to 21-year-olds who are low paid has remained broadly unchanged over the last decade.
  • Between the ages of 18 and 21, half of all full-time employees were paid less than £7 per hour in 2010.  This is in sharp contrast to those aged 22 and over, where the proportions are much lower.
  • In wholesale, retail, hotels or restaurants, around three-quarters of all employees aged 16 to 24 are paid less than £7 per hour.
  • Half of all adults aged 16 to 24 earning less than £7 per hour work in hotels & restaurants or wholesale & retail.
  • These proportions and shares are both rather different than those for older adults – see the indicator on low pay among older adults.

Why this indicator was originally chosen

Low wages disproportionately affect young adults.  This age group is also the only one where the average weekly wage fell in the early 1990s. 1  This indicator tracks the number of 18-to 21-year-olds on low rates of pay, this being the only age group for which low pay statistics are currently available.

Definitions and data sources

The first graph shows the estimated proportion of employees aged 18 to 21 who were paid below an hourly pay threshold that rises in line with average earnings and reaches £7 in the latest year.  So, for example, average earnings rose by 42% between 2000 and 2010, and the 2000 threshold used is therefore £4.94 (£7/1.42).  The data is shown separately for men and women.  The available data only distinguishes between the 18-21 and 22+ age groups.

The threshold of £7 per hour has been chosen as being roughly two-thirds of the UK median hourly earnings at the time and is commonly used as a threshold which analysing low pay.

The second graph show the same information but in terms of absolute numbers rather than percentages.

The third graph shows, for the latest year, the estimated pay distribution of the workforce aged 18-21, with the data shown separately for men and women.

The figures in the first three graphs are from published ONS statistics which were themselves derived from the Annual Survey of Hours and Earnings (ASHE), with adjustments by the ONS.  The data source for the earnings deflators is the ONS Average Earnings Index, using the series which is seasonally adjusted (LNMQ).  2

The fourth graph shows, for the latest year, the proportions of employees paid less than £7 per hour by age group, with the data shown separately for part-time workers, full-time women and full-time men.

The data source for the fourth graph is the Annual Survey of Hours and Earnings (ASHE) and relates to the United Kingdom.  The proportions have been calculated from the hourly rates at each decile using interpolation to estimate the consequent proportion earning less than £7 per hour.  Note that this method is much less reliable where the proportion is less than 10%.

The fifth graph shows, for the latest year, how the proportion of employees aged 16 to 24 earning less than £7 per hour varies by industry sector, with the data shown separately for men and women.

The sixth graph shows the distribution of employees aged 16 to 24 earning less than £7 per hour between industrial sectors.

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

The data source for the fifth and sixth graphs is the Labour Force Survey (equivalent data by age group and industry not being available from the published results of ASHE) 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 LFS and ASHE are well-established government surveys, designed to be representative of the population as a whole.  However, the ONS methods for combining and adjusting the data are not available for public scrutiny, and the underlying dataset itself is not publicly available.

Relevant 2007 Public Service Agreements

None directly relevant.

The numbers

Graphs 1 and 2

Below £7 per hour in 2010 deflated for the average rise in earnings

Year Thousands Proportion
Men aged 18 to 21 Women aged 18 to 21 Men aged 18 to 21 Women aged 18 to 21
1998 460K 530K 61% 67%
1999 470K 540K 60% 68%
2000 490K 600K 63% 72%
2001 530K 590K 63% 68%
2002 550K 590K 62% 70%
2003 510K 530K 58% 66%
2004 540K 620K 59% 65%
2005 530K 590K 58% 65%
2006 570K 650K 60% 66%
2007520K 590K 58% 65%
2008560K 620K 61% 68%
2009530K 590K 63% 68%
2010510K 580K 63% 69%

Graph 3

Numbers are as shown on the graph.

Graph 4

Age groupFull-time men Full-time women Part-time
Aged 18-21 49% 52% 72%
Aged 22-29 15% 15% 45%
Aged 30-39 5% 7% 28%
Aged 40-49 3% 10% 29%
Aged 50-59 5% 10% 29%
Aged 60+ 10% 15% 32%
All ages 9% 12% 37%

Graph 5

Industry Men Women Total
Hotels and restaurants 36% 39% 75%
Retail & wholesale32% 39% 71%
Manufacturing and other production 35% 10% 45%
Public sector 11% 31% 42%
Private sector services22% 18% 40%
Community services23% 41% 65%

Graph 6

Hotels and restaurants 18%
Retail & wholesale35%
Manufacturing and other production 12%
Public sector 14%
Private sector services12%
Community services9%

1. Labour Force Survey figures for Winter 1994/95, as cited in Action on aftercare consortium Too much to young, Barnardo’s, 1996, page 23.
2. Average earnings jumped around a lot in early 2009 so it does actually matter precisely which 2009 earnings index is used.  The April index has been used, partly because the ASHE survey was conducted in April and partly because it was after most of the jumping around.