Very few workers paid below the national minimum wage (NMW) take their cases to the Low Pay Commission (LPC) despite “abundant evidence and anecdote” suggesting underpayment takes place on a “considerable scale”, the enforcement body has found.
According to a newly published report by the LPC examining compliance and enforcement of the NMW, workers who remain with the same employer year-to-year are more likely to remain underpaid. The study found that around one in three underpaid workers were still underpaid the following year, and the LPC cited changing jobs as the “surest way to escape underpayment”.
However, the body found “too many factors continue to create constraints” for low-paid workers who wish to exercise their mobility and challenge exploitative employers.
Even though the labour market has tightened since the pandemic and vacancies rose to record levels, the obstacles to changing jobs “continue to weigh heavy in the minds of low-paid workers we speak to”, the LPC said.
The enforcement body found that the prevalence of insecure work makes job moves feel risky, while insecure employment leaves workers in a position of greater dependency on their employers and creates conditions ripe for exploitation. This wariness surrounding moving jobs could be exacerbating employers’ recruitment difficulties, the LPC added.
Later this year, the LPC will present evidence to the government to help decide what should happen with the National Living Wage after 2024, with the body hoping the rate will reach its target of two-thirds of median earnings.
Bryan Sanderson, chair of the LPC, said: “We are entering a crucial period for the national minimum wage, with major decisions impending over the policy’s future trajectory.”
He added: “It is important to remind ourselves that the minimum wage is only truly effective in protecting living standards if it is enforced. This is a necessity not only for the employees but to ensure that the great majority of employers who are managing through difficult times are protected from unfair competition.”