More than five million people still paid less than the living wage

The research, conducted for KPMG by Markit, suggests that
21 per cent of employees are being paid less than the living wage, up from 20 per cent a year ago.

In Yorkshire, the figure is above the national average at 24 per cent.

This has largely been driven by living costs outstripping earnings growth – median hourly wages have risen by just 1.1 per cent, while the living wage rate increased last year by 3.5 per cent nationally and three per cent in London.

KPMG said that whilst the living wage has grown rapidly and successfully as a concept, wider take-up is needed if more people are to earn a wage that supports a basic standard of living.

Unsurprisingly, the proportion of jobs paying below the living wage is highest among the younger age groups, with 72 per cent of 18-21 year olds receiving less than the living wage.

Women are also significantly more affected than men (27 per cent compared to 16 per cent), while part-time workers are far more likely to receive low pay than full-time workers (43 per cent compared to 12 per cent).

The research also found that sub-living wage pay is less prevalent for direct employees in the public sector than it is in the private sector, largely due to differing job types. In addition, many low- paid workers in the public sector are employed by private contractors.

The living wage is a voluntary rate of pay designed to enable workers to afford a basic but acceptable standard of living. The rate is currently £8.55 an hour in London and £7.45 outside – compared to the national minimum wage which stands at £6.31.

The living wage has been growing rapidly as a concept, with over 400 organisations now accredited payers of the rate compared to 60 this time last year.

This week is “Living Wage Week” with new living wage rates for London and the rest of the country due to be announced today,

Marianne Fallon, head of corporate affairs at KPMG, said: “Low pay is a real problem in Britain, particularly at a time when the cost of living is rising at a faster rate than earnings.

“This was underlined by the Social Mobility and Child Poverty Commission recently.

“People on less than the living wage can seriously struggle to make ends meet. Whilst it is still not easy, earning a Living Wage can make a huge difference to individuals and their families, enabling them to afford a basic standard of life.

“For many businesses, paying the living wage rate need not actually cost any more. At KPMG, we have found that better staff performance and motivation combined with lower absenteeism and turnover cancels out the extra salary costs.

“Living Wage Week is the perfect opportunity for employers to consider whether they can make the move. It may not be possible or practical for everyone, but all employers need to do what they can to address the problem of low pay. In practice, transition to the living wage is a phased programme that does not happen overnight. Making an initial assessment is an important first step.”

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