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Number of people not being paid minimum wage on rise: report

Analysis: Bryan Sanderson
Analysis: Bryan Sanderson

By Alan Jones

A "worrying" number of workers are being paid less than the minimum wage despite progress in enforcing the rate, according to a new report.

A study suggested that 439,000 people were paid below the hourly minimum in April last year, an increase of around 30,000 on the previous year.

Women are more likely to be paid less than the minimum wage, with childcare having the highest proportion of underpaid workers, as well as those working in hospitality, retail and cleaning.

Bryan Sanderson, who chairs the Low Pay Commission, said: "Our analysis reveals that a worrying number of people are being paid less than the minimum wage.

"We recently celebrated 20 years of the minimum wage - it has raised pay for millions of workers, but it is essential that people receive what they are entitled to.

"It is also vital for businesses to be able to operate on a level playing field and not be illegally undercut on wages.

"The Government has made real progress with its enforcement of the minimum wage, but more needs to be done to ensure employers comply in the first place and workers know how to enforce their rights."

Enforcement by HM Revenue and Customs has benefited from increased funding, leading to a record number of workers identified as underpaid, arrears paid and fines against employers, said the commission.

But the number of cases opened and closed stood still, it added.

Nye Cominetti, economic analyst at the Resolution Foundation, said: "The national living wage has delivered a welcome pay boost to millions of low-paid workers, but rising non-compliance risks undermining its success.

"A higher minimum wage inevitably increases the pressure for non-compliance, which is why enforcement should be expanded too. Welcome steps have been taken in that direction, but this work shows more needs to be done."

A Government spokesman said: "It is illegal not to pay the minimum wage and we are cracking down on employers who fail to pay the national minimum wage and national living wage.

"We have almost doubled HMRC's budget to £26.3 million since 2015, ensuring it has the resources needed to investigate employers who break these rules.

"HMRC has issued £14.1 million in financial penalties to employers that breached the rules - the highest amount ever."

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