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 782.

    The concept of a 'living wage' is no more than an average of what the average person would need to survive. But people aren't all average and quite a lot only need to earn a fraction, living with parents, in public housing, student accomidation, or a flat share drastically reduce those costs. 5m may earn less than the living wage, but they still manage to live on it

  • rate this

    Comment number 781.


    There are laws against this . . .

  • rate this

    Comment number 780.

    Sadly to regenerate manufacturing you have to be extremely good at it or plainly accept low wages to compete. Hopefully some new methods of manufacturing may make it more plausible to manufacture here in the UK.. However we need some clever thinking and training to do it in a way that will bring well paid jobs back to the UK .It can be done as the UK has always been a leader in doing things first

  • rate this

    Comment number 779.

    The problem isn't the business community, it's the skills of the UK workforce. If you have no skills to offer a business, the question you have to ask is, what value do I bring to this company.

    Work hard at school, avail yourself of all the free education we enjoy in this country and work hard to be successful. This is how you improve your prospects and earning potential.

  • rate this

    Comment number 778.

    It's not just manufactoring and off shoring 521.newsman face
    A lot of IT and business processes have gone to cheap labour in India, Romania and Brazil. The most galling part is that these "cheap" outsource companies are bringing their staff onshore and charging more than British professionals. The staff don't see much of the high rates though

  • rate this

    Comment number 777.

    mess 719, sueD,
    "Remove housing benefits, which should remove inflated rents"

    It won`t though Sue, because the housing market is not a true free market. The supply side is heavily regulated and works against the ordinary customer.

  • rate this

    Comment number 776.

    This is NOT a problem just as long as they have the royals to look up to! They should just be greatful they have such a wonder family going about 'opening' events and putting on lavish dinners. They should thank god for these people. There are other poor folk over here that do NOT have such a luxary! Here they only have the like of the stinking rich Romney's!

  • rate this

    Comment number 775.

    @ 748.bounce bounce bounce

    From your tone you are a Labour voter ... there lies your answer to where this collossul mess came from

    Simple ... never vote labour again

  • rate this

    Comment number 774.

    "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 ???"

    No, but then Labour didn't either, did they.

    Makes me laugh all this Tory bashing; as if there were no bonuses, fat cats, tax evasion or bankers before May 2010

  • rate this

    Comment number 773.

    Big business loves driving down wages. Unsuprisingly, they love globalisation (ie immigration). Government allows this because they want the taxes generated. But as we've seen with Amzaon, Facebook, taxes aren't forthcoming. Until we vote in a government that will prioritises its voters, over company profits and economic migrants, it will only get worse.

  • rate this

    Comment number 772.


    The wealthiest 10% pay 50% of all income tax.

    And the wealthiest 10% also own 90% of the wealth.

    Methinks there may be a maths lesson for you here.

  • rate this

    Comment number 771.


    Don't you see any connection at all between abuse in Care Homes and falling wages? Untrained, poorly paid staff are part of the problem, charges made by private Care Home companies are another, as is rent. Despite this... someone is still getting rich. You just refuse to make the connection.

  • rate this

    Comment number 770.

    I get housing/income/child support so about £26k a year (say £35k if taxed). Now you want me to join you lot gettin up every day to work for less than £8 an hour? I got kids, sky, ciggies, beers, a car, holidays, ipad yeah I got two. And you lot sneer at me walking around in my dressing gown finking I'm stupid? I don't get outa bed for £20hr! lol u r the muppets! not us.

  • rate this

    Comment number 769.


    You are obviously an attention seeker and some kind of internet troll so I won't give you the reaction you crave. Lets hope you never need any help from a low paid member of society.

  • rate this

    Comment number 768.

    So then, in the view of "Mike Cherry, policy chairman for the Federation of Small Businesses", these business should be subsidized by the taxpayer because they don't have a viable business model. If the businesses paid a living wage, they would have a better-motivated and loyal workforce, and probably become more profitable.

  • rate this

    Comment number 767.

    The wages people are paid might be OK if there wasn't income tax, NI (a euphemism for even more income tax) and then 20% VAT on everything you buy, fuel tax, this and that tax, tax tax and more tax...

    Perhaps it isn't so much whatt people get paid but how much the state is spending which we can no longer afford to fund.

  • rate this

    Comment number 766.

    Combine 5 million workers earning little more than scraps with at least 2.5 million out of work altogether and you get a huge underclass that can't look after themselves, let alone build a dignified future for themselves. Add to this huge cuts to the welfare budget and you've got a recipe for widespread government-imposed poverty. Latest news: make pensioners work for pensions. Disgusting gov't.

  • rate this

    Comment number 765.

    @ sue doughchop

    Market forces will not lower rents. With low interest rates and high house prices through govt. interference, demand for rented accomodation outstrips supply.

    Removing housing benefit before capping rents at a lower than current level will mean 1 family to a room slums. If you were correct then rents should reflect existing cuts in housing benefit but they are rising not falling.

  • rate this

    Comment number 764.

    Perhaps the solution is to introduce legislation that caps employer's profits until ALL the company's employees are on a minimum living wage, indexed to the cost of living and set in conjunction with ALL the Workers' Unions. This way employers will be motivated to offer decent conditions so they can start paying themselves a decent share of the profits.

  • rate this

    Comment number 763.

    @704 chorley lass
    'Answer - get 2 jobs'

    What a ridiculous suggestion! There are currently 2.6 million people who don't have one job! Are you happy to continue to support 2.6 million people doing nothing? That's what will happen with your silly 2 jobs crackpot scheme. Let the 2.6 million have any future jobs (if there ever is any)


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