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Overtime pay shrinks

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Men were found to be far more likely to receive a premium for doing paid overtime

The number of people doing overtime has fallen and the reward for doing so has shrunk, according to research from the Resolution Foundation.

Time for Time and a half? found that the share of employees doing paid overtime has fallen from 17% in 1997 to 10% last year. The premium that overtime brings workers compared to their normal hourly pay has also shrunk.

Just half of all those doing paid overtime enjoyed a premium of at least 10% last year (down from 61% 20 years ago), while just a fifth (20%) of those doing overtime got ‘time and a half’ (down from 25%).

Men were found to be far more likely to receive a premium for doing paid overtime. Last year their typical overtime premium was 23%, while for women it was zero.

The research argued that the scale of paid overtime means it deserves a more prominent role in the debate about reforming Britain’s labour market. Conor D’Arcy, senior policy analyst at the Resolution Foundation, said organisations should be paying more attention to the issue.

“Paid overtime is a massive workplace issue for millions of workers, and yet it enjoys a fraction of the attention given to more niche areas like the gig economy,” he said. “This is likely due to it being a bigger deal outside London, and in more traditional sectors like manufacturing and agriculture.

“But, while paid overtime is popular, it’s far less lucrative than it used to be. Only a minority of workers still enjoy the traditional ‘time and a half’ pay premium.”

He added that the Taylor Review has rightly suggested addressing this for workers on the minimum wage. “When the government responds in the new year it should go even further and trial minimum overtime premium rates for other low-paid workers,” he said.

“Minimum premium rates for overtime already operate effectively in countries like the US. Looking at such options here in Britain could bring a much-needed income boost at a time when workers are in the midst of a 20-year pay downturn.”