Work and Pay

Low pay and company size

  • Published 22nd Feb 2016
  • Authors: Tom MacInnes, , Peter Kenway,
  • Category: Work and Pay

April 2016 marks the introduction of the new national living wage, effectively a rebranded minimum wage for those aged 25 and over. This year it will be set at £7.20 per hour, rising to £9.00 per hour by 2020.

This paper sets out an initial estimate of how many people will be directly affected by this increase and how that varies across different sizes of company in different sectors. It is restricted to those aged 25 and over working in the private sector, around 2.1m or whom are currently paid £7.20 or less. It looks at the differences by gender, part and full time and industry. It finds that:

  • Size: Over half of low paid people aged over 25 in the private sector work in companies with over 250 employees. One third work in companies with fewer than 50 employees
  • Full-time/Part-time: Around one third of low paid jobs are part-time roles in large companies.
  • Gender: Women working part-time in large companies account for around one quarter of low paid jobs. Those working part-time in small companies account for around one sixth.
  • Sector shares: Around one quarter of all low paid jobs are in large companies in the retail and wholesale sector. There are over twice as many low paid retail and wholesale jobs in large companies as there are in small or medium sized companies.
  • Sector risks: In administration and support, as well as health and social care, the proportion of employees who are low paid is higher in large companies. In manufacturing, the opposite is true.

The proportion of jobs that are low paid is always higher for part-time than full-time employees, regardless of company size or sector. Among people working full-time, the proportion who are low paid is higher in small companies. Among those working part-time, the proportion is higher in large companies.