Almost one in four British workers on the government’s national living wage are paid less than they should be, according to official figures, with more women than men hit by underpayments.
The figures revealed by the government’s Low Pay Commission showed that 369,000 workers – representing about 23% of all of those over the age of 25 who are covered by the national living wage – were paid less than that amount this year.
In a worrying signal for households on the lowest incomes, the snapshot of the labour market showed that the number of people affected by underpayment rose from about 339,000 a year ago.
The Low Pay Commission said significant increases in underpayments were found for people working in childcare, where two-fifths of workers who should have got the national living wage received less.
Minimum wages in the UK explained
The living wage is independently calculated, voluntary and based on the cost of living. There are two rates, to recognise the higher cost of living in London. These are:
London living wage: £10.20 per hour
UK living wage: £8.75
The national living wage is a statutory minimum all employers must pay staff aged over 25.
National living wage (formerly the minimum wage): £7.83
Other minimum rates of pay apply to workers under the age of 25.
Women were more likely than men to be underpaid the living wage they should have received, while the worst-offending sectors of the economy were in retail, hospitality and cleaning and maintenance.
Rebecca Long-Bailey, the shadow business secretary, said that it was “deplorable” to see an increase in the number of workers not getting the wages to which they were entitled.
“This should be a red line for any government, but the Tories are failing to stop unscrupulous employers denying workers their rightful pay. This is unfair to workers but also unfair to those employers who do play by the rules,” she said.
About 1.6 million workers in Britain have their wages set at the national living wage, which is the legal minimum for workers over the age of 25. Having risen from £7.50 per hour in April to £7.83 an hour, Philip Hammond, the chancellor, announced that it would increase again to £8.21 an hour in April.
However, hundreds of thousands of people on the living wage do not always receive the pay rises due to illegal underpayment or mistakes by their employer when the increases are made by the government.
The figures from the Low Pay Commission may also include data errors, as well as cover some workers who receive benefits such as accommodation in lieu of pay. However, many will simply be illegally underpaid.
Ministers have been urged to impose tougher penalties on companies that pay their staff below the minimum wage, after government figures published two months ago showed that only £14m in fines was taken in a year when rogue employers underpaid their staff by £15.6m.
It is a criminal offence not to pay the minimum wage. Firms found in breach must repay staff all the money they are owed and could face a maximum fine worth 200% of every penny underpaid.
Frances O’Grady, general secretary of the TUC, said more investment was needed to identify lawbreaking employers.
“The government must do more to track down, and crack down on, every employer that cheats staff out of the minimum wage they are owed,” she added.
