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Living wage is answer to pay squeeze, says Archbishop John Sentamu

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Image caption The Living Wage is calculated using the basic cost of living

Rising living costs and stagnating wages are creating a "double squeeze" on the lowest paid, a senior churchman has said.

Archbishop of York John Sentamu said that millions of workers might not benefit from the economic recovery unless they were paid the living wage.

An independent commission, that he chairs, has encouraged employers to pay a living wage if they can.

The voluntary wage is calculated according to the basic cost of living.

The rate, which is not binding, stands at £7.65 an hour. It is higher than the legal UK minimum wage of £6.31 an hour.

In London, the living wage rate is £8.80 an hour.

'Fair wage'

The commission said that more than five million workers were paid less than the living wage. However, the numbers receiving the wage increased by 9%, or 420,000, over the past year.

"The idea of making work pay is an empty slogan to millions of people who are hard pressed and working hard, but find themselves in a downward social spiral," Archbishop Sentamu said.

"They are often in two or three jobs just to make ends meet. Meanwhile, the UK taxpayer picks up the bill in tax credits, in-work benefits and decreased demand in the economy.

"With the economy showing signs of recovery, employers that can pay a living wage must do so. They should choose between continuing to make gains on the back of poverty wages, or doing the right thing and paying a fair wage for a hard day's work."

Affordability

The report concluded that prices of "everyday" items had risen faster than high-priced goods, with food costing 44% more than in 2005 and energy prices doubling, while vehicle costs had remained stable and the cost of audiovisual equipment has halved.

The study added that children of parents on low pay were less likely to achieve at school, while a worker earning the living wage got nearly double the amount of family time during a typical working week as somebody on the minimum wage.

TUC general secretary Frances O'Grady said: "The UK economy may be in recovery mode, but most people's pay packets have yet to experience a similar revival. For those families firmly stuck in low-pay Britain, life is tough, and they continue to struggle to make their wages stretch far enough to meet the cost of food, fuel and other essentials.

"One way of easing the financial pressures on low-paid families would be for more employers to pay the living wage."

John Longworth, director general of the British Chambers of Commerce, said: "Making ends meet is clearly an issue of huge concern to many in Britain today, and we applaud all of those businesses that pay, or aspire to pay, their staff above the living wage.

"Yet many businesses tell us that there is a limit to what they can afford. Sixty percent of companies say that at present, the national minimum wage should rise - but by no more than inflation, so as to avoid pressure to raise pay across all levels of a business.

"Prudent rises in the minimum wage, and praise for those businesses that aspire to a living wage, is the right way to preserve jobs."

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