Five million paid less than living wage, says KPMG

Barman The vast majority of bar staff do not receive the living wage, the report claimed

One in five workers in the UK is paid less than required for a basic standard of living, a report has said.

The proportion is much higher among waiters and bar staff, at up to 90% of workers, the research for accountants KPMG suggested.

It said that nearly five million people failed to command the living wage - a pay packet that enabled a basic standard of living.

The rate stands at £8.30 an hour in London and £7.20 in the rest of the UK.

This rate is voluntary, unlike the National Minimum Wage - the amount that employers must pay by law, which is set at £6.19 an hour for those aged 21 and over.

"Times are difficult for many people, but of course those on the lowest pay are suffering the most," said Marianne Fallon, head of corporate affairs at KPMG, which has itself signed up to pay the living wage.

"Paying a living wage makes a huge difference to the individuals and their families and yet does not actually cost an employer much more.

"Tackling in-work poverty is also vital if we are to enable more people to improve their life prospects and increase social mobility in this country."

Why I pay the living wage

Mark Constantine

Mark Constantine, co-founder of cosmetics chain Lush, said he was encouraged to pay the living wage by staff at a Christmas party.

"I basically got cornered," he said. "Staff explained the situation to me."

He said that the advantage was that staff did not feel they needed to take on other jobs.

"They are not exhausted, and not worried about paying their rent."

He said that there were affordability issues for employers. Lush has introduced the living wage for staff in London and is "working towards" paying it in the rest of the UK.

'Tough choices'

The report suggested that Northern Ireland had the highest proportion of people earning below the living wage, at 24% of workers, followed by Wales at 23%.

The lowest levels were in London and the South East of England, both at 16%, it said. In terms of total numbers, London, the North West of England and the South East of England had the most.

When looking at sectors of employers, some 90% of bar staff and 85% of waiters and waitresses failed to get as much as the living wage.

Some 780,000 sales and retail assistants were not paid to living wage level, the highest total of any group of employees, the report suggested.

Frances O'Grady, the incoming general secretary of the TUC, 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 do not 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.

Start Quote

When it comes to the living wage, politicians are really looking for a free lunch: or rather, a free pay rise. They want an increase in wages for people at the lower end of the pay spectrum that doesn't cost anyone any money”

End Quote

"Many more employers could afford to adopt the living wage, and we hope that many more decide to pay it in the coming months. Now more than ever is the time for employers to put an end to poverty pay."

But Mike Cherry, policy chairman for the Federation of Small Businesses, said: "Every employer would want to be as reasonable as they possibly can, but in the current economic climate it is not going to be possible for those sectors that have traditionally been unable to pay the national minimum wage."

He said rent and rates were becoming more expensive, and so were energy costs, so the living wage was an aspiration but not affordable for some employers.

He added that the market would determine what was affordable.

A separate report by the CBI said that employers have needed to take a cautious approach to employment and pay given the economic climate, and this is set to continue.

The group said that there would be pay restraint over the next six months, but this was designed to protect employment.

However, one 23-year-old care worker told the BBC News website that life was tough financially - even when on the living wage.

Report author Mike Kelly: "Businesses should look at wages in a more innovative way"

She said that the cost of petrol, when driving between the homes of the people she cared for, took a big chunk out of her pay which totals £7.21 an hour.

"It would be nice to have enough so I am not worried about paying rent every month and only having £100 left to spend," she said.

"I would like to live comfortably rather than struggling from pay cheque to pay cheque."

Regional pay

The government is considering whether to push on with plans to end national pay bargaining and introduce a system of regional or local pay rates.

However, a group of 60 academics have warned, in a letter to The Times newspaper, that any new system could widen inequalities between different parts of the UK.

The group claimed that there was "no convincing evidence" that regional pay would boost local economies, and that it could reduce consumer spending. They argued that would depress pay for public sector workers outside London and the South East of England.

This follows a campaign by unions to stop any introduction of regional pay rates for public sector workers.


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  • rate this

    Comment number 22.

    Yet tories, liberals and labour wish to renew trident.

    C McK

  • rate this

    Comment number 21.

    Don't forget that even those of us who do enjoy a good standard of living pretty much do so on the back of cheap consumer goods produced by people earning very meagre wages and living in much worse conditions. Sorry, that's not an answer but we should be grateful for what we do have and we can all do something to make quality of life in our own communities a little better.

  • rate this

    Comment number 20.

    When Politicians talk of Free Market Economy and Wealth creation, they are of course championing Capitalism. The two fundamentals of Capitalism are growth and exploitation. Instead of spending their time cutting deals with Corporate business for the easy money, isn't it about time they rolled their sleeves up and found a way to moderate the growth and stop the exploitation of the Labour force?

  • rate this

    Comment number 19.

    Why is there no campaign to take workers on the minimum wage out of income tax and NI? If they could work for up to 45hrs/week before paying those taxes, then at about 40hrs/week they'd receive the equivalent of living wage.

  • rate this

    Comment number 18.

    When I first started working at the age of 18 years old I really struggled to even put food on the table. I am 45 years old now and other than a brief few years spent working at a decent wage from 2008 to 2010 where I could buy everything I wanted from my salary I do not think things have changed much since I was 18. Its still a struggle but now I have a stroke when reaching the check out till.

  • rate this

    Comment number 17.

    If we had a competent government these past ten years leading to the recession, the standard of living would be much cheaper and more accessible to so many more people. Whilst the rich think about whether to except their £million bonuses and worry about whether their daily fillet steak is going to tender enough to be cut with a fork, there are people who are struggling with constant price rises.

  • rate this

    Comment number 16.

    Increasing this amount will just drive inflation which in turns increase the amount of money in which good cost, again driving up the amount the living allowance wage would have to be and the circle will continue.

    Get a skilled job and then you may find yourself on a reasonable wage.

  • rate this

    Comment number 15.

    I worked hard as a civil servant for 23 years, chipping in with my taxes to the good of the economy, until Mr Cameron saw fit to make me redundant.
    Since then I want to work but have been a benefits claimant, a drain on the economy. I tried my own business to pay my own way, [Unsuitable/Broken URL removed by Moderator], but no one dare spend anything the way the economy is going.
    Wages need to rise to bring back confidence.

  • Comment number 14.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this

    Comment number 13.


    Perhaps they should get themselves some skills then.

    Someone will still have to do it.

    A full time job, regardless of what it is, should enable someone to at least the vary basic needs of life without help from the state.

    So many people state benefits are too high. Well this is the problem, poor pay on flexible, non-standard hours, for 1 in 5 people. 1 in 5!

    £6 an hour is a joke.

  • rate this

    Comment number 12.

    When half of the people get the idea that they do not have
    to work because the other half is going to take care of them,
    and when the other half gets the idea that it does no good to
    work because somebody else is going to get what they work for,
    that is the beginning of the end of any nation.

  • rate this

    Comment number 11.

    Why on earth does the minimum wage exist, when it so clearly isn't the "minimum" that people need.

    Which moron decided to set the bar so low in the first place? No wonder there's so many working families having to "top up" what they earn by claiming benefits.

    Its about time the "Living wage" was adopted, and scrap the toothless minimum.

    Lets see what happens when people receive proper wages.

  • rate this

    Comment number 10.

    This is going to be a good - KPMG are now 'leftie commie scum' according to some of the more right wing regulars :-)

  • rate this

    Comment number 9.

    If this is true then surely it would also mean 1 in 5 UK households would be without TVs, washing machines, fridges, mobile phones, internet and other non-necessities.

    What a load of rubbish.

  • rate this

    Comment number 8.

    No news here - tax payers are subsidising businesses. This is a completely predictable consequence of unregulated global competition. Our employees are competing against countries which have much lower rates of pay than the UK.
    It's the middle income earners who are really going to feel the pinch next, as they will be paying ever greater tax to subsidise the lower paid and their employers..

  • rate this

    Comment number 7.

    The article says "KPMG, which has itself signed up to pay the Living Wage."
    KPMG is a huge, multinational Accountancy and Auditing company, so I can't believe for a second that anyone working for them earns less than £7.20 a hour.

    So to trumpet on about the fact they have signed up to this rate is quite incredible - how very magnanimous of them.

  • rate this

    Comment number 6.

    Perhaps they should get themselves some skills then. Please don't tell me that someone who brings food and drink to a table for a living is worth more than £6.19 per hour, because they really aren't.

  • rate this

    Comment number 5.

    Here's an idea: Legislate that no company can pay an 'executive bonus' unless every employee earns at least the living wage.

  • rate this

    Comment number 4.

    And we've only just realised this, have we?? It's been that way for years, this is nothing new. My daughter has worked in the same place for 5 years +/-, granted Part-time, but she has always been at least a £1.00 below the minimum wage.

  • rate this

    Comment number 3.

    This govenment has done absolutely nothing to ease the burden on low paid working families.

    How about addressing issues such as energy, food, transport and child care costs?

    The only thing they have done is to put downward pressure on wages and attack employment rights, which will only make the problem much worse.


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