The proportion of low-paid workers in Britain has fallen to its lowest level since 1980, according to a report.

The number of low-paid workers fell by almost 200,000 last year, including more than 130,000 women and 120,000 people aged 21 to 30, research by the Resolution Foundation suggests.

Retail, administrative and support services saw the biggest fall.

The study praised the introduction of the national living wage three years ago for "significantly" reducing low-paid workers from 20.7% of the workforce in 2015 to 17.1% last year.

"Low pay" was calculated as being less than two-thirds of the typical hourly wage (£8.52).


Image: The study calculated "low pay" as being less than two-thirds of the typical hourly wage

Nye Cominetti, of the Resolution Foundation, said: "An ambitious but cautious approach that saw the national living wage continue to rise after 2020 - at a faster pace than the minimum wage has increased over its 20-year history - would put Britain on course to eliminate low pay in the middle of the 2020s, while still giving the government room for manoeuvre if economic conditions change."

Chancellor Philip Hammond said: "The national living wage has already played a vital role in improving the lives of the lowest paid and we increased it again last month, giving a pay rise to 1.8 million people.

"The Low Pay Commission will deliver on its remit for the National Living Wage to reach 60% of median earnings by 2020.

"But later this year we will need to set a new remit beyond 2020.

"We want to be ambitious - driving productivity across the income distribution, with the ultimate objective of ending low pay in the UK.

"But we also want to take care to protect employment opportunities for lower paid workers."

The thinking in the Treasury is that by pushing up the lowest wage levels, employers might consider spending more on investment and less on low paid workers in the future.

However, Sky News economics editor Ed Conway said there was "more than a little irony" that the Conservative Party was so proud of their national living wage policy.

He said: "It is true that, as this Resolution Foundation research shows, it has helped reduce the number of people in low pay in the UK in recent years. It is true that this counts as one of the government's major achievements over the past half decade.

"However, when you look back at how it came into being, you realise it was never really a Conservative policy in the first place. In fact, George Osborne stole the idea off Ed Miliband, introducing it in his summer budget in 2015 in an effort to declaw the Labour opposition.

"That said, don't assume this policy is all just about trying to make the poor a little better off, there is another steelier philosophy behind Philip Hammond's embracing of the national living wage.

"It comes down to the fact that low wages in the UK have allowed businesses to employ more cheap workers rather than investing in the machinery and robotics that could do their jobs in the future.

"The thinking in the Treasury is that by pushing up the lowest wage levels, employers might consider spending more on investment and less on low-paid workers in the future.

"It's about attempting to push up productivity as much as about improving the welfare of the British people."