According to a new report by the Low Pay Commission, around 371,000 workers will be underpaid by April 2024.
The Compliance and Enforcement of the National Minimum Wage in 2020 document published today (19th December) shows a slight rise from last year. However, the numbers remain below the pre-pandemic levels.
The latest data from the LPC shows a decrease in low-paid employees being underpaid, when viewed in context with the overall minimum wage coverage increasing greatly between 2023-2024. This will go up from 1.5m workers to 1.9m.
In April 2024, there will be 344,000 unpaid jobs among those aged 21 or over. Of these, 140,000 are underpaid by 50 pence an hour or more. Similar numbers paid less than 10p per hour of the living wage.
The LPC noted that information published with HM Revenue and Customs most recent naming round suggests that deductions and unpaid time are the two leading causes of underpayment, each occurring in more than 1 in 3 cases.
Baroness Philippa Stroud said, “Too many low-paid workers that we speak to feel powerless, and are cut off from the institutions who exist to protect these workers. Low-paid workers may be forced to accept poor working conditions and low pay for fear of the repercussions.
The all-too common experience of uncertainty and insecurity about their rights can discourage employees from reporting underpayments or seeking better jobs. To end underpayment, a strategy must begin by restoring the confidence of low-paid workers.
She says that the minimum wage ambitions of the government should be matched by an equal level of ambition in terms enforcement. The Fair Work Agency, she says, is a great opportunity to reform the enforcement labour rights and the Employment Rights Bill incorporates several recommendations made previously by the LPC.
Baroness Stroud said: “Our report reiterates the magnitude of this problem and suggests fundamental ways that the new agency can build confidence in enforcement system.”
The LPC makes recommendations to government regarding the enforcement system. It also added that the evidence of the past decade shows that underpayments for many workers last a long time. The report noted that as time passes, one third of workers remain in low-paying positions.
The tight labour market, it believes, has meant that more underpaid workers have been able to move into roles in which they are properly paid. However this trend has slowed down as the market has changed following the pandemic.
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