Traditionally instructing has always paid badly, but I would say now there are opportunities out there to get salaried positions as a flight instructor.
I do believe Tollerton were offering a 12000 a year retainer with £20 an hour flight pay. Cambridge were offering 18000 a year salary. One or two schools in Scotland were offering salaried postions that were advertised in the flying magazines last month. These are still "low" salaries but it is better than the flight pay only terms that are commonly offered; these are survivable salaries for a year or two until you progress onto something better (airlines or multi/IR instructing).
If you search around in the UK you can find instructor positions with semi-respectable retainers now.
I only became a full time FI when offered a decent retainer, I could never have considered going full time on flight pay only. Remember no one is forcing you to accept FI jobs paying flight pay only, you have a choice, hold out for better terms and conditions.