CRISIS OF LOW PAY IN OLDER INDUSTRIAL AREAS
New figures highlight financial burden on taxpayer
There is a crisis of low pay in Britain’s older industrial areas, says a report released today.
Although there has been progress in replacing the jobs lost from industries such as coal, steel, engineering and textiles, too many of the new jobs pay low wages and too many are insecure and short-term.
The new report from the Industrial Communities Alliance highlights the extent to which pay in older industrial areas has fallen behind the national average and behind the levels in the most prosperous parts of the country
The report also exposes the alarming extent to which the government has had to step in to prop-up low-wage families though Tax Credits.
The research shows that across older industrial Britain as a whole, median earnings – that is, the pay of an employee in the middle of the local wage spectrum – are just 73 per cent of the London level for men and 63 per cent for women. This equates to pre-tax gaps of £184 a week for men and £182 for women.
Median earnings in many local authority districts across older industrial Britain are barely 60 per cent of the level in London.
The poorest-paid 10 per cent in older industrial areas earn less than one-third of median earnings across Britain as a whole.
None of these comparisons are distorted by high-earning bankers or other well-paid London professionals.
Far too many workers have therefore had to rely on Tax Credits and other means-tested benefits, such as Housing Benefit, to top up miserably low wages. Across most of older industrial Britain, Tax Credit payments average between £650 and £1,000 a year per adult of working age.
For many households, Tax Credits of well over £2,000 a year have become the norm. Looking ahead, however, poorer households face big financial losses as planned cuts to in-work benefits, announced in the last Parliament, are gradually implemented.
Cllr Terry O’Neill, National Chair of the Industrial Communities Alliance, said:
“The weakness of the economy in so many of our areas has made it easier for employers to recruit the workers they need and to get away with low wages. The newly-elected government should do more to outlaw unfair employment practices and should increase the minimum wage.
“But a lasting solution to the problems in our areas also requires serious efforts to rebuild the industrial base of the economy. Manufacturing is a high-value, high-productivity sector that offers the potential to deliver higher wages.
“Older industrial Britain is a big part of the country, accounting for around 30 per cent of the entire population. If the Prime Minister is serious about helping the people and places left behind, our communities need to be top of her list.”