Archbishop of York John Sentamu told an audience of senior figures in British business “income inequality is a giant we must slay together,” as he urged them to pay the living wage.
Dr Sentamu also put pressure on the Government to pay the voluntary rate, saying it should “take a lead” on tackling low pay.
The Archbishop, who chaired the Living Wage Commission, told the Confederation of British Industry conference that while free markets encourage innovation they also tend to increase disparities.
There is a moral case for helping the millions of people “caught in poverty and without hope,” he said, as well as pointing to evidence it would help the economy ad reduce Government spending.
“Britain is at risk of becoming a place where the ‘haves’ and the ‘have nots’ live in separate parallel worlds; where the ‘Common Good’ has become a pious platitude rather than a genuine believable aspiration.
“We must find both the political and economic will to create a society which is fair for all rather than fair for a small few,” he said.
The living wage is a voluntary rate of pay that is calculated using research from the York-based Joseph Rowntree Foundation on the earnings needed to enjoy an “adequate” standard of living.
Employers can publicly pledge to pay the living wage which was recently increased to £7.85 per hour outside London and £9.15 in the capital.
York, Rotherham and Sheffield councils are among living wage payers in Yorkshire alongside food manufacturer Nestle.
The national minimum wage, which all employers must pay by law, currently stands at £6.60.
Dr Sentamu said: “Income inequality is a stain on all our consciences. There is a strong role for government and business to support the living wage.
“UK Government is a major employer, and just as importantly, they can take leadership on low pay. Businesses can also demonstrate the benefits of paying their employees justly.”
The CBI has set out proposals for helping the lowest paid after years of squeezes on disposal income but put responsibility squarely in the Government’s court by calling for a rise in the national insurance threshold and extending free childcare.
A Government spokesman said: “As the CBI make clear, it’s not possible to create a sustainable rise in living standards with short-term sticking plaster fixes.
“That is why we must keep working through the plan that is building a resilient economy and has enabled us to announce the first real-terms increase in the minimum wage since the great recession.
“We appreciate that the effects of the great recession are still being felt, which is why we have taken continued action to help hard-working people by cutting income tax, cutting fuel and energy bills and helping local authorities to freeze council tax.”