JAMES is 24-years-old and works a full working week. He doesn’t have children and doesn’t have tax credits, and he takes home just over £220 per week. From that he has to pay his rent, cover his bus fare to work each day and all his bills. I met James when I visited a Church Army project a few weeks ago. He told me that he often goes without food because he simply cannot afford to eat.
There are five million people like James who struggle on low pay with their earnings barely above the minimum wage. That means 22 per cent of the total workforce is on low pay.
A recent report from the Resolution Foundation makes clear that people trapped on low pay are often destined to stay on low pay. A quarter of those on low pay have remained on low pay for the past five years. And women are far more likely to be on low pay than men. Twenty seven per cent of women in work are on low pay, as opposed to 17 per cent of men.
Ahead of Living Wage Week, I have heard horror stories of some people on low pay only being offered shifts of three hours 45 minutes, to avoid the employer having to pay for a break. By the time you have paid a return bus fare, how worthwhile is your shift?
Others work two part-time jobs and still don’t earn enough money to pay the bills and feed their families. The cost of food has risen three times faster than wages, the cost of fuel has risen faster than inflation and the poorest in our society simply cannot keep their heads above water.
This has huge implications for children. A teacher told me his school is now giving breakfast to children who display signs of hunger. Other schools are giving vitamin pills to children. Not to mention the million food parcels given out by food banks.
Keeping your head above water is hard work when you are on low pay. But these five million people face the daily struggle of fearing the next brown envelope falling on the doormat, terrified the washing machine will break down, or anxious that the boiler will stop working.
How do you even begin to pay for an unexpected expense like that? Well many people end up turning to pay day lenders, some of which charge up to 6,000 per cent APR. To put that in context, £500 borrowed for up to a year from one well-known pay day lender that advertises on TV, would result in a debt of £23,000 after 12 months, if no payments were made. This is simply beyond belief.
If this is hard, imagine how much more difficult this is for young people. You are only entitled to the minimum wage of £6.50 per hour if you are over 21 years of age. If you are 18-20 your minimum wage is £5.13 and if under 18 it is only £3.79. And, on top of all this , the Government has cut benefits for young people.
Not only is low pay a headache and living hell for millions of people this is bad news for the whole country. The Government faces a massive benefits bill to support the working poor, a bill which by the end of the next Parliament is expected to top £19bn a year. Low pay also reduces the tax take for the Exchequer, and explains why despite improving economic circumstances and increasing numbers of jobs, the tax take has been reduced.
Unless we see changes, most of these five million people will still be on low pay in five years time. So what can we do? I passionately believe we need to make the Living Wage the new minimum wage.
The Living Wage is measured on an annual basis according to what workers need to afford a basic standard of living. It was initially an academic concept created by the University of Loughborough’s Centre of Research in Social Policy, but it has since grown into a nationwide campaign with hundreds of employers signing up including the likes of Barclays, York Council and HSBC. There are many benefits for employers. Employers have reported that productivity has increased, absenteeism has declined, their staff have higher morale and are not so tired from having to work more than one job to make ends meet.
I am CEO of Church Army, a mission agency of the Anglican Church, committed to serving some of the most marginalised people in the land. Because we are committed to alleviating poverty, I made sure Church Army was one of the first Living Wage employers. Alongside our own staff we have a number of domestic and housekeeping staff who are largely employed by outside agencies.
We worked hard to address this issue in partnership with these agencies to ensure all the staff employed by agencies who work with us pay their staff the Living Wage.
I think it is incumbent on leaders of organisations to ask their agencies what people working in their buildings are earning. So if you are an employer reading this, I urge you to sign up to be a Living Wage employer.
With people on low pay the least likely to benefit from economic growth, it is morally wrong that people have to work long hours and still don’t have enough money to make ends meet.
We need a new strategy to help people escape low pay. The Living Wage should be a key part of that strategy. It helps those on low pay earn their way out of poverty, it reduces the cost of low pay to the taxpayer and begins to make our country a fairer place. The Living Wage is the right thing to do – it’s a no brainer.
• Mark Russell is chief executive of Church Army and writes in a personal capacity. He tweets @markrusselluk Log on at www.churcharmy.org.uk for further details.