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 802.

    743. UnbelievableTekkers

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

    At that rate someone might even be able to afford a years tuition at University in only 8 years time. They might even be able to finish a degree and be ready for a reasonable paying job in just 25 years of somehow spending their days both working and studying full time.

  • rate this

    Comment number 801.

    752. Chris
    Lot's of comments about getting a skilled job, eg...
    Surely you should understand in any country only a small amount (15%-30%??) of people are capable of skilled jobs.
    Oops! Tell that to the Finns, who certainly would not agree. The problem may well be that the UK is not actually well enough educated, neither academically nor technically.

  • rate this

    Comment number 800.

    785.The Bloke

    3 Minutes ago

    @704 chorley lass
    'Answer - get 2 jobs'

    What a ridiculous suggestion! There are currently 2.6 million people who don't have one job! //

    And how several million immigrants?

    Coincidence? I think not.

    Chuck them all out, now. And watch unemployment drop, and wages rise.
    Cant we chuck you out instead?

  • rate this

    Comment number 799.

    When I look at job adverts I see wages being offered that are exactly the same as those that were offered in the 80's. In 1984 I earned 9.55/hr as an electrical fitter. Todays adverts want to pay about £10. No wonder no one is buying new cars nor houses.

  • rate this

    Comment number 798.

    3 Minutes ago
    The Bulgarians and Romanians get full access to the UK in 2014,
    wages won't go up when you have inexhaustible supply of cheap
    labour from eastern Europe.
    Yes, But why do think DC is so keen on Scotish Independence?
    Scotland joins EU, England then enforces EU accession rights.
    He can then repratriate 1.46 of the 1.5 million Scots back home.

  • rate this

    Comment number 797.

    @597.Mrs Joe 90
    As much as I agree with helping those in need, it's amazing how many people you'll find waxing the immigration lyrics instead of looking at ways of improving their skills to be more marketable. If the cost of labour is too high then companies will just move to places where labour is cheaper and more skills available, then you'll have no one to blame.

  • rate this

    Comment number 796.

    Just another part of the economic jigsaw that is failing. Company profit margins are small because of high overheads, heating, transport, etc. so companies cannot afford to pay a living wage. Unfortunately many firms now bully employees to do 2 or 3 peoples work for no extra pay. The country is trapped in this downward cycle. Flat growth, recession, unemployment. Government policy isn't working.

  • rate this

    Comment number 795.

    Anyone with a basic understanding of economics knows that price, pay etc are driven by supply and demand. If you push pay up you fuel inflation which in turn makes the things you need to buy more expensive. You then need to push up pay and so the sprial goes on......... It would be interesting to know what the average hourly rate KPMG charged public sector (tax funded) clients!

  • rate this

    Comment number 794.

    the government simply doesn't care about poor people. They are not tory voters

  • rate this

    Comment number 793.

    where we live about 90% of jobs pay minimum wage or a few pennies more, what chance do we have when you just can't get a decent living wage???

  • rate this

    Comment number 792.

    @755.PaulRM, you numbers are a little wide of the mark, on an average 40 hour week, 5 million people earning an extra £1/hour is only £3.1 billion per year, based on 11% NI and 20% tax. Calc : (((7.20*40*52)-(6.20*40*52))*5,000,000)*.31 = £3.12 Billion.

    Consdier that the government is borrowing ~£14 billion/month so its not that much money.

  • rate this

    Comment number 791.

    Just because you live in the UK does not entitle you to a better standard of living than people elsewhere. The past 30yrs have been an exploitation by the West of the developing world.What we are witnessing is a shift of this balance. The developing world is taking its rightful share of things and willing to work harder for it. Wealth is not some fundamental right of white people. Get used to it.

  • rate this

    Comment number 790.

    The blame for this lays in the same place as the blame for the immigration problem in the UK, and that is with Employers and Government. The govt for failure to read treaties they sign and the main blame is greedy employers who pay minimum wage and let hard working tax payers pick up the bill for subsidising their business. If a Business can not pay a living wage then its a broke business.

  • rate this

    Comment number 789.

    Why are us British so accepting of our fate? We outnumber them, thousands to one...

    Its the 'Right to Buy' trap mate. Millions now locked into massive debt under the guise of a 'mortgage'. 'How can i strike when i have a mortgage to service'?!?
    That's why the Tories did it - to lock the working class into an economic prison. I can't believe so many people fell for it...

  • rate this

    Comment number 788.

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

    Just another clear sign the the rich/poor gap is getting vastly wider. Eye-watering salaries, bonuses, pensions for those at the top but a life of servitude and poor living standards for the millions at the bottom.

  • rate this

    Comment number 787.

    When will the politicians, economists and commentators make the connection between income and costs? If people earn more, things get more expensive - it is supply and demand, basic economics. Just look at London - the reason it is so expensive is because there are more people with more money.

    There needs to be focus on reducing the cost of living; just increasing earnings increases costs.

  • rate this

    Comment number 786.

    754.Jane Sircombe "this financial crisis is turning us into a feudal society".
    Absolutely. There are some things that Govt can do little about (ie. global food / fuel price inflation) but others, such as using welfare reform to fund tax cuts for the richest, or allowing slum landlords to stockpile starter homes, are typical of the Nasty Party's attempts to turn us into a wage slave economy.

  • Comment number 785.

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

  • rate this

    Comment number 784.

    Here's an idea: Legislate that no company can pay an 'executive bonus' unless every employee earns at least the living wage.
    Capital, capital!
    But how?
    The laws are made to favour the rich and the powerful first and foremost.

  • rate this

    Comment number 783.

    761. Raymond Hopkins

    To be fair I wasn't sure about the mobile phone price so used some Google-tekkers and found a contract for £7.50/month with a fairly decent (and free) smart phone!


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