Five million paid less than living wage, says KPMG

 
Barman The vast majority of bar staff do not receive the living wage, the report claimed

One in five workers in the UK is paid less than required for a basic standard of living, a report has said.

The proportion is much higher among waiters and bar staff, at up to 90% of workers, the research for accountants KPMG suggested.

It said that nearly five million people failed to command the living wage - a pay packet that enabled a basic standard of living.

The rate stands at £8.30 an hour in London and £7.20 in the rest of the UK.

This rate is voluntary, unlike the National Minimum Wage - the amount that employers must pay by law, which is set at £6.19 an hour for those aged 21 and over.

"Times are difficult for many people, but of course those on the lowest pay are suffering the most," said Marianne Fallon, head of corporate affairs at KPMG, which has itself signed up to pay the living wage.

"Paying a living wage makes a huge difference to the individuals and their families and yet does not actually cost an employer much more.

"Tackling in-work poverty is also vital if we are to enable more people to improve their life prospects and increase social mobility in this country."

Why I pay the living wage

Mark Constantine

Mark Constantine, co-founder of cosmetics chain Lush, said he was encouraged to pay the living wage by staff at a Christmas party.

"I basically got cornered," he said. "Staff explained the situation to me."

He said that the advantage was that staff did not feel they needed to take on other jobs.

"They are not exhausted, and not worried about paying their rent."

He said that there were affordability issues for employers. Lush has introduced the living wage for staff in London and is "working towards" paying it in the rest of the UK.

'Tough choices'

The report suggested that Northern Ireland had the highest proportion of people earning below the living wage, at 24% of workers, followed by Wales at 23%.

The lowest levels were in London and the South East of England, both at 16%, it said. In terms of total numbers, London, the North West of England and the South East of England had the most.

When looking at sectors of employers, some 90% of bar staff and 85% of waiters and waitresses failed to get as much as the living wage.

Some 780,000 sales and retail assistants were not paid to living wage level, the highest total of any group of employees, the report suggested.

Frances O'Grady, the incoming general secretary of the TUC, said: "It is shocking that in this day and age, one in five workers is still earning less than is needed to maintain a decent standard of living.

"The living wage is not a luxury, and means that low-paid workers do not have to make tough choices over whether they can afford the everyday things that most of us take for granted, such as their fuel bill or a winter coat for their children.

Start Quote

When it comes to the living wage, politicians are really looking for a free lunch: or rather, a free pay rise. They want an increase in wages for people at the lower end of the pay spectrum that doesn't cost anyone any money”

End Quote

"Many more employers could afford to adopt the living wage, and we hope that many more decide to pay it in the coming months. Now more than ever is the time for employers to put an end to poverty pay."

But Mike Cherry, policy chairman for the Federation of Small Businesses, said: "Every employer would want to be as reasonable as they possibly can, but in the current economic climate it is not going to be possible for those sectors that have traditionally been unable to pay the national minimum wage."

He said rent and rates were becoming more expensive, and so were energy costs, so the living wage was an aspiration but not affordable for some employers.

He added that the market would determine what was affordable.

A separate report by the CBI said that employers have needed to take a cautious approach to employment and pay given the economic climate, and this is set to continue.

The group said that there would be pay restraint over the next six months, but this was designed to protect employment.

However, one 23-year-old care worker told the BBC News website that life was tough financially - even when on the living wage.

Report author Mike Kelly: "Businesses should look at wages in a more innovative way"

She said that the cost of petrol, when driving between the homes of the people she cared for, took a big chunk out of her pay which totals £7.21 an hour.

"It would be nice to have enough so I am not worried about paying rent every month and only having £100 left to spend," she said.

"I would like to live comfortably rather than struggling from pay cheque to pay cheque."

Regional pay

The government is considering whether to push on with plans to end national pay bargaining and introduce a system of regional or local pay rates.

However, a group of 60 academics have warned, in a letter to The Times newspaper, that any new system could widen inequalities between different parts of the UK.

The group claimed that there was "no convincing evidence" that regional pay would boost local economies, and that it could reduce consumer spending. They argued that would depress pay for public sector workers outside London and the South East of England.

This follows a campaign by unions to stop any introduction of regional pay rates for public sector workers.

 

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  • rate this
    +12

    Comment number 1249.

    The minimum wage needs lifting to a level where you do not have to claim any benifits, that would bring the benifits bill down and give a payrise to millions of the poorer paid workers.

  • rate this
    +9

    Comment number 1216.

    I can see why people feel aggrieved that they can't make ends meet, but is this really the fault of the employer?

    It's the high costs of products such as gas, electricity, petrol etc which cause so many people to struggle, and it's the providers of these products (or tax) who should be explaining themselves.

    I don't see why employers should have to fund other companies hiking up their prices.

  • rate this
    +3

    Comment number 1215.

    What's the point in a minimum wage if it's not enough to live on? Then people wonder why it's better to stay on benefits?

  • rate this
    +15

    Comment number 1117.

    I'm currently working on the minimum wage for London at £6.19 and even with tips it's not enough to cover the rent and bills as well as spend money on food, people don't have money to spend in pubs/restaurant anymore which reduces the number of customers and the amount we get paid! No month goes past without a struggle!

  • rate this
    +27

    Comment number 787.

    When will the politicians, economists and commentators make the connection between income and costs? If people earn more, things get more expensive - it is supply and demand, basic economics. Just look at London - the reason it is so expensive is because there are more people with more money.

    There needs to be focus on reducing the cost of living; just increasing earnings increases costs.

 

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