The number of workers on low pay in the UK has fallen by more than 300,000 following the introduction of the national living wage, a think tank says.
According to the Resolution Foundation, this is the biggest year-on-year fall in low pay since 1977 – with its report claiming the national living wage has not been the “jobs-killing disaster” some feared.
The share of workers on low pay has fallen below 20% for the first time since the 1980s, with low pay defined as less than two-thirds the median hourly wage.
Despite record employment levels, the foundation says there is still more work to be done.
Its report has warned that the UK remains too reliant on low-paid jobs – and 61% of workers in these positions are women.
Conor D’Arcy, senior policy analyst at the Resolution Foundation, said: “While it’s important to celebrate the national living wage as a bold, positive policy action, we shouldn’t get complacent.
“As well as the challenges it presents to some employers, over four million workers are still expected to be in low pay by 2020, and the old problems of women and part-time workers being far more likely to be low paid than men remain.
“The Government must continue to work closely with employers to monitor any specific challenges arising from the ramping up of the national living wage, as well as continuing to tackle illegal non-payment.”
The national living wage was introduced by the Government in April last year to warnings from many business groups that some sectors – particularly retail – could not afford it and productivity would be hit.
The independent Office for Budget Responsibility agreed job losses were a risk as ministers moved to tighten minimum pay rules with then chancellor George Osborne saying at the time: “Britain deserves a pay rise.”
The starting rate for everyone over the age of 25 was £7.20 per hour – an increase of 50p per hour on the previous national minimum wage requirement.
A Government spokesman responded: “The national living wage has delivered the fastest pay rise for the lowest earners in 20 years and they will continue to see their pay go up, with the rate set to increase to 60% of median earnings by 2020.
“But we want to go further by creating good quality jobs for all through our modern Industrial Strategy, boosting earning power and improving living standards across the country.”