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 762.

    Isn't all this just part of Goerge's masterplan to lower the living standards and slashing the welfare budget putting more and more people into poverty. If we could get ourselves out of the EU and get rid of this rechid minimum wage.

  • rate this

    Comment number 761.

    743. UnbelievableTekkers
    716. Dave McNaughty
    Tat's £158 of expense before you've done anything but work. No TV, no phone, no going out.h


    So that leaves you £36/week -

    £4.00 for mobile phone (£16/m)
    £4.00 for a mobile? I pay less than half of that in Scandinavia. As I wrote earlier, it's hard to see why UK prices are so high.

  • rate this

    Comment number 760.

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

    Great idea ............... but can you honestly see the tories bringing in that little gem ???

  • rate this

    Comment number 759.

    Back to the Mill owners arguments by the cons. Think you were poor? In my day blah, blah, blah, blah. And then in some countries they are so poor they have to live down the drain pay a mill owner for the priviledge of going to work, and be grateful to be allowed to live. So given all that it's fine that people in the UK don't get a living wage !

  • rate this

    Comment number 758.

    It's all a double edged sword. Employers can't afford to raise the pay unless they cut staff (so more people are out of work) which in turn have to take benifits OR the tax is lowered which means that the GDP suffers forcing the government to make cuts which puts more people onto benifits. We need MORE industry rather than out sourcing it.

  • rate this

    Comment number 757.

    Hmm... 5 million people living on or below the poverty line, a paltry few hundred rich at the top, taxing the poor... historically, this doesn't bode well. Different countries in different times would have had a bloody revolution long before we got to this point. Why are us British so accepting of our fate? We outnumber them, thousands to one...

  • rate this

    Comment number 756.

    This is familiar - the combination of escalating fuel costs, family break-up and lack of properly paid jobs has meant that in my rural community we share and juggle helping out where we can! The young people benefit and make a real contribution to keeping the show in the road and for the past month we have had homeless unemployed friends on our sofa-bed in the hall (we only have two bedrooms)!

  • rate this

    Comment number 755.

    A fair day's pay for a fair day's works should be the aim.But if 5m people are below £7.20/£8.30 it's a simple calc to show increasing it brings extra direct tax paid to govt of approx £8.5bn-that's money no longer in the economy buying things-& that doesn't account for VAT! Less money in economy means fewer jobs - doh!Less tax on poor & catching tax dodgers would work better - don't ya think?

  • rate this

    Comment number 754.

    I bet this 5m does not include the self employed small business or sole trader, many of whom if they worked it out would find their hourly rate considerably less than the NMW.
    No paid holidays, no sickness pay but always been able to live within their means for as long as the work comes in, this financial crisis is turning us into a feudal society.

  • rate this

    Comment number 753.

    I think this report has slightly missed a point. I earn over £8 an hour but I dont get given a tip for every task I complete such as people waiting tables.

    Add their tips in to the equation and I sure it wont be so much of a problem... and if you dont get tips given to you then your obv need a career change.

  • rate this

    Comment number 752.

    Lot's of comments about getting a skilled job, eg...
    16. Poddy100
    Get a skilled job and then you may find yourself on a reasonable wage.

    Surely you should understand in any country only a small amount (15%-30%??) of people are capable of skilled jobs.
    So how are you going to treat the non-skilled people? That's a morality question as much as anything.
    I know where the Tories stand on this!

  • rate this

    Comment number 751.

    If the minimum wage is £6.19 an hour then someone on this wage working a 40 hour week should not have to pay tax. The personal allowance should therefore be raised to £13k immediately and all other tax bands recalculated to fund the difference.

  • rate this

    Comment number 750.

    Seems to me that most questioning the validity of this do so based on a dislike of lefties, immigrants, perceived scroungers etc. rather than sound economic facts. Which makes whatever point they are struggling to make redundant. This topic shows the governement that the populist holes they dig in the sand for their gullible voters to stick their heads in are still very popular.

  • rate this

    Comment number 749.

    Just more drivel made up because the minimum wage exists so they all need a new bit of nonsense to make up problems over.

    Live within your means, there is no such thing as 'expected way of life'.

    Get used to it such sums are undreamt of wealth to those who we compete for work with. The west can not retain its vast incomes while we permit free trade, it is levelling out,

  • rate this

    Comment number 748.

    Rich get rich and the poor get poor, it's the same old story nothing changes. I have two part time jobs and still get a pittance and there's overpaid footballers who get hundreds of thousands per week (something i can never get in my lifetime) for just kicking a stupid ball about for an hour and a half. It's not on. And everything's getting dearer, how does the govt expect us to live?

  • rate this

    Comment number 747.

    No doubt this will be ignored by the Con Dems who will again bleet about the country's debts while giving rich people tax cuts.

  • rate this

    Comment number 746.

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

    We have finite supplies of energy and food. You can choose what you eat and what appliances you use. You choose you means of transport and kids are optional.

    Is it right to legislate so everyone can leave their TV on all the time, eat like a king, drive a 4 litre V12 Jag and have 5 kids?

  • rate this

    Comment number 745.

    Cannot believe the number of Selfish self-centred self opinionated persons on this blog just because UR doing ok, doesn't mean everyone is. Some have said 'go and find a job that pays better' that's very simple to say, less simple to do Who would do that work if nobody wants it? Self service pubs, restaurant's Grocer shops, news agents? someone has to do these jobs let's pay them a decent wage

  • rate this

    Comment number 744.

    699.D D
    Just now
    @ 643 David H
    Brilliant, if only it were that simple....
    Have you ever considered investing? stocks and shares? they're gambling rackets too!
    Are you havin a laugh, it's all run by dodgy fraudulant bankers & financers.
    I'm getting an average return of 168%

  • rate this

    Comment number 743.

    716. Dave McNaughty
    Tat's £158 of expense before you've done anything but work. No TV, no phone, no going out.h


    So that leaves you £36/week -

    £4.00 for mobile phone (£16/m), £3.00 for TV Licence (£12/m), still £29.00 left.

    Weekly trip to the pub £3.50 x 4 pints - £14.00,

    Still £15.00 left to do with as you please...


Page 28 of 66


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