Fifth of workers ‘not paid enough to live on’

The study by financial experts at the accountancy firm KPMG shows that 4.82m UK employees – the equivalent of 20 per cent – receive less than the living wage, the rate of pay designed to enable workers to afford a basic standard of living.

In Yorkshire, the problems are even greater with 22 per cent of the workforce – a total of 440,000 employees – paid less than the living wage. Only Northern Ireland with 24 per cent and Wales with 23 per cent have a greater proportion of workers not receiving the living wage.

The rate is currently £8.30 an hour in London and £7.20 in the rest of the country, compared with the national minimum wage rate of £6.19 an hour.

At a time of economic hardship, lower paid workers are feeling the impact hardest, according to KMPG, with more than four in 10 claiming their finances are worse now than they were just one month ago.

The living wage is a voluntary rate of pay that some employers give their staff and since 2001 it has positively impacted on more than 10,000 employees and their families and redistributed over £96m to some of the UK’s lowest paid workers, KPMG said. But ahead of next week’s Living Wage Week, the study showed that a sizeable proportion of the country’s workers are paid less than this rate.

Marianne Fallon, a partner of KPMG, claimed that paying workers a living wage improves productivity and motivation while also cutting absenteeism.

She added: “This research really lays bare the extent of the problem of low pay in Britain.
Times are difficult for many people, but of course those on the lowest pay are suffering the most. Paying a living wage makes a huge difference to the individuals and their families and yet does not actually cost an employer much more.”

The research showed workers in the hospitality industry are the worst affected, with 90 per cent of bar staff paid lower than the living wage. More than four out of five waiters and waitresses (85 per cent) were also paid less than the living wage. Three quarters of kitchen and catering assistants, as well as launderers and dry cleaners, were paid less than the living wage. About 70 per cent of cleaners and florists also received less than the living wage.

The research also showed that, while financial confidence is generally low across those surveyed regardless of income, it is especially pronounced among those who earn less than the living wage. Nearly half (46 per cent) said their appetite for major purchases has gone down in the last month, compared with just under a third (32 per cent) of those earning above.

TUC general secretary designate Frances O’Grady 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 don’t 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.”

The research analysed data from the Office for National Statistics (ONS) with a Household Finance Index survey.