The proportion of employees in low-paid jobs in the UK increased from 21 to 22% of the working population last year. Low-paid employees now number over 5 million.
The report by Resolution Foundation found that the number of people earning less than two-thirds of median hourly pay, equivalent to £7.69 per hour, rose to 5.2 million, an increase of 250,000 on the previous year. This increase in part reflects the rapid growth in UK employment. The report also found the ‘stickiness’ of low paid workers, as almost 25% of minimum wage employees had been stuck on the minimum wage for the last five years. The study also found that women are far more likely to be low-paid than men. Finally and very significantly the report found that the UK has among the highest proportion of full-time low paid workers across the 34 countries that are members of the Organisation for Economic Co-operation and Development.
Just recently the Office for National Statistics produced a report showing that output per hour worked in the UK is now more than 30% lower than the US, Germany and France.
So the question is does low pay create low productivity? These studies would suggest there is a link. If that is the case the great challenge for management is to adopt new human resource strategies to improve the capability of the workforce through knowledge and skills training; to create an environment whereby managers will lead and employees will follow and finally to establish a workplace culture which will lead to a highly motivated workforce. Workforce diversity will be an essential ingredient in these HR strategies. So for instance employees with great knowledge and skills may well work on into their 70s; zero hours contracts may attract scarce talent that would not relish full time working; temporary agency workers provide great value as one only pays for the time they are needed; and the core permanent employees are conditioned to integrate and thrive in a mixed society.
If this challenge can be met then British business has a real opportunity of increasing productivity and performance and become a competitive power house in world trade. In this scenario employers should enjoy sufficient improvement in profits to reward employees for their endeavours. The end result would be turning a low pay low productivity UK into a high pay high productivity UK and that would be a result.
Dr Hugh Billot
HR GO Group of Recruitment Companies
HR GO Recruitment offers solutions to all your staffing needs, temporary and permanent, please call 0845 130 7000
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