Escaping low pay has become harder in the last decade, with the proportion of people moving out of the bottom 10 per cent of earners falling since 2015, a new LSE analysis shows.
The pattern reverses the trend over the previous ten years, when the proportion of people who moved out of the lowest-weekly-paid each year rose from around 20 per cent to 27 per cent. The latest estimates show that around 21 per cent had moved out of the bottom pay bracket over the course of a year.
The election analysis "Work, wages and inactivity" from LSE’s Centre for Economic Performance (CEP) also shows that while employment rates are close to historic highs, jobs have become increasingly polarised between providing secure and insecure work.
The minimum wage has helped raise the pay of the lowest-paid workers in relative terms. When the minimum wage was introduced 25 years ago, the highest paid earned four times as much as the lowest paid, now that ratio is 3.5 times as much. But the absolute gap has widened over the same period. Adjusting for inflation, top earners were paid £22 more an hour in 2024, compared to £16 more in the 1990s.
The report also finds:
- The UK has replaced its long-term unemployment problem with a long-term sickness problem.
- Around 1 in 14 people of working age are not working because of ill health, and while this is concentrated among older workers – 1 in 9 of those aged 50-64 are long-term sick – the rates of sickness among the under 50s are now at the highest recorded.
- Early retirement has been falling since 2009, with a slight uptick after the pandemic.
- There are now more full-time students than working individuals between those aged 16-24.
- There are fewer households with a mix of working and non-working individuals – and more households where everyone works, or no-one works.
Report author Jonathan Wadsworth said: “The rise in long-term sickness rates first began after the recession of the 1980s and has never been rectified. This, alongside persistent inequalities in pay and employment, are still the most important longstanding problems besetting the UK labour market.”
The full report is available here: "CEP Election analysis: Work, wages and inactivity."