13 September 2023

The Low Pay Commission (LPC) has published the ‘Compliance and enforcement of the National Minimum Wage’ report. The LPC's 2023 report presents data on underpayment and explores the persistence of underpayment for individual workers.

This report sets out data on minimum wage underpayment up to April 2022. It uses innovative analysis to look at what happened to underpaid workers from year to year between 2012 and 2019, and how likely they were to escape underpaying jobs. In conclusion, it brings together evidence from employers and low-paid workers on employment conditions, the labour market and the factors which force workers to accept exploitation.

The research found that around one in three underpaid workers were still underpaid the following year. The surest way to escape underpayment remains by changing jobs; workers who remain with the same employer year-to-year are more likely to continue to be underpaid. Too many factors, however, continue to create constraints for low-paid workers who wish to exercise their mobility and challenge exploitative employers.

The report marshals evidence from employers and low-paid workers on employment conditions, the labour market and the factors which force workers to accept exploitation. The LPC state that even though the labour market has tightened since the pandemic, and vacancies have scaled record levels, the obstacles to changing jobs continue to weigh heavy in the minds of low-paid workers. 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 the conditions for exploitation. This wariness about moving jobs may be exacerbating employers’ recruitment difficulties.

Bryan Sanderson, Chair of the Low Pay Commission, said:

“We are entering a crucial period for the National Minimum Wage, with major decisions impending over the policy’s future trajectory. 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.

In addition, enforcement of one right does not exist in a vacuum but is connected to conditions in the workplace and workers’ confidence in the labour market. A truly comprehensive strategy would go beyond enforcement to consider labour mobility and the provision of means by which employee rights can be more effectively asserted.”

It has been reported that very few workers bring underpayment cases to the enforcement body. The report repeats previous recommendations for the government on the need to better identify the scale of the problem and improve the awareness and enforcement of workers’ rights.

Later this year, the LPC will present evidence to the government to help decide what should happen to the National Living Wage (NLW) after 2024.

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