Life on Low Pay as Inflation Begins to Ease

Costs remain high even as inflation begins to ease, leaving many low paid workers facing ongoing financial hardship. While workers across the income distribution are feeling the squeeze, the situation is particularly challenging for the UK’s 3.5m low paid workers.  

This is the fourth time we have run the ‘Life on Low Pay’ survey to track the real-life impact of being paid less than the real Living Wage. Our polling data shows that despite the general easing of inflation over the past year, low paid workers have only reported a slight reduction in financial hardship during that time, and are still experiencing higher levels of financial hardship than before the cost-of-living crisis.  

This year’s polling shows that 50 per cent of workers are worse off than a year ago, with 65 per cent reporting it was because of the increased cost-of-living. Though this is an improvement on August 2022, when 62 per cent of low paid workers reported being worse off. These findings suggest that high living costs have continued to erode workers’ pay packets.  

As the results of this survey show, a real-terms pay cut is simply not an option for the lowest paid workers, many of whom have already been forgoing essentials like food and heating. That is why it is more important than ever that employers do right by their employees and pay them a real Living Wage. 

Key findings from this research are summarised below:  

Financial hardship: 

• 39 per cent of low paid workers reported regularly skipping meals for financial reasons and falling behind on household bills respectively, both down from 42 per cent in August 2022.  

• The proportion of low paid workers that reported being unable to heat their homes for financial reasons stayed level at 32 per cent over this period, as did the proportion of low paid workers falling behind on rent or mortgage payments (27 per cent in 2023, 28 per cent in 2022).  

• The incidence of low paid workers getting a pay day loan to cover essentials fell slightly from 24 per cent to 21 per cent between August 2022 and August 2023.  

Income after essential expenses: 

• After paying for essentials, 27 per cent of low paid workers either had no money left over each week or had to use loans to cover essentials, showing no change since our last survey in August 2022.  

• An additional 42 per cent reported having less than £30 left over per week, with 13 per cent having less than £10. 

Changes in work: 

• 55% of respondents reported undertaking more work in the past 12 months because of the increased cost-of-living. 

• Of those, almost half (46%) reported taking on more hours at their existing workplace, while a further 32% reported taking a second job. 

Reliance on foodbanks: 

• 60% of workers reported using the services of a foodbank over the past 12 months, compared to 56% reported last year.  

• 32% of these respondents reported increasing their use of foodbanks over the past 12 months, while 44% said their use had stayed the same. 

• 43% of workers reported using the services of a foodbank regularly (at least once per month) over the past 12 months. 

Impact of low pay on health, relationships and quality of life: 

• Compared to last year, workers were less likely to say the pay they received had a negative impact on their physical and mental health, their relationships and their overall quality of life. However, they were still higher than those reported by low paid workers before the start of the cost-of-living crisis in 2022. 

• Over half of respondents reported that there would be a positive impact on their health, relationships and quality of life if their pay was increased in line with the cost-of-living. 

Expectations for the next 12 months: 

• Low paid workers were slightly more optimistic about future wage growth compared to 12 months ago. In August 2023, more low paid workers (22 per cent) expected their hourly pay to increase in-line with, or above the cost-of-living over the next 12 months, compared to 15 per cent in August 2022. 

• Nearly 40 per cent of workers ranked increased pay as the most effective measure an employer could take to help them deal with the increased cost-of-living. Low paid workers were more than three times as likely to cite this than any other measure.  

• After pay, the other top ranked factors included better work life balance, more hours and more support with financial well-being.