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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  • Comment number 1122.

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

  • rate this

    Comment number 1121.

    @TheBladesman, yes, perfectly happy to rid ourselves of NMW as long as we got rid of state working benefits. This would then mean the employer would HAVE to pay a wage enough for people to do the job, would likely reduce wages of course...but also prices, and will increase numbers of jobs

  • rate this

    Comment number 1120.

    I also disagree with this notion that being a waitress is an "unskilled job".
    Serving the correct orders to multiple people at the same time, quickly & keeping everything refreshed/in order...A GOOD waiter/ess IS highly skilled, but wages usually mean they end up elsewhere & we're back to paying peanuts for monkeys. I know many intelligent people who simply don't have the ability to do that job.

  • rate this

    Comment number 1119.

    @mofro...ive been hoping for that for years actually...nice payout and walk into a higher paid i have worked for years to get where i am today...i wont struggle to get another job...even if that happened id be in the 10% that deserves it anyway

  • rate this

    Comment number 1118.

    ''...the proven economic disadvantages of arbitrary "limits" and the unintended consequences that itwill cause...The "Bury our heads brigade" out in force today...''

    So you favour scrapping the NMW and allowing companies to pay employees whatever they want? £5/hr? £3/hr?

    Sorry for the delay, just shaking the soil off my head.

  • rate this

    Comment number 1117.

    I'm currently working on the minimum wage for London at £6.19 and even with tips it's not enough to cover the rent and bills as well as spend money on food, people don't have money to spend in pubs/restaurant anymore which reduces the number of customers and the amount we get paid! No month goes past without a struggle!

  • rate this

    Comment number 1116.

    Batchy, we don't recieve tips for every task. I worked 9 hours yesterday and recieved one tip all night, which was more than everybody else on my shift. Money for me is very tight. Even just going to the supermarket proves a task, as I have to be very careful how much I spend. I can't put the heating on past 18 degrees because otherwise I can't pay the bill. Sort it out Cameron!

  • rate this

    Comment number 1115.

    The obscenely high cost of essential "utilities" water, gas, electricity,
    transport. banking etc lies at the heart of the problem. All these services are making money for shareholders. As long as essential services are
    used as piggy banks for capitalists the situation will go from bad to worse.

  • rate this

    Comment number 1114.

    Rampant capitalism does not work and never has done, it thrives on unequality and poverty.The reason Britain prospered during the Victorian days was most of its population were exploited if you want child labour and starvation back go ahead and carry on with this rampant capitalism.

  • rate this

    Comment number 1113.

    @flybymike Well said! My partner used to work for an Agricultural Employment Agency, and was told by the boss to not employ anybody of UK descent. The reasoning? "EE are cheap, do as they're told and don't complain".

  • rate this

    Comment number 1112.

    As a tax payer why are my taxes in the form of tax credits being used to bring up low paid families wages up to the poverty line? Surely as M Constantine states its in the employers interest to pay a living wage. Too much of the Welfare budget is spent on benefits for those in work. Maybe it's time we had some truth about the amounts & those who receive the majority of benefits.

  • rate this

    Comment number 1111.


    I don't know anyone in a high-paying job who worked much harder than anyone else to get there. Just saying.

    In my experience, "real life" is about applying for jobs you're barely qualified to do and convincing yourself you're entitled to the wage. Companies used to invest in people; now they whine on QT about the lack of skilled/competent applicants.

  • rate this

    Comment number 1110.

    Raising wages to keep up with the rise in cost of living linked to these very wage increase is taking an economic tiger by the tail. It is sadly ironic how the well intended mandated wage increases combined with government assistance can have an insidiously demotivating effect that condems so many of us to life at the bottom.

  • rate this

    Comment number 1109.

    Someone suggested Communism as the answer,and proposed that everybody should be on the same wage.
    Sadly this idea will not work. I know many who would leave their jobs instantly and go for an easier one : but they need the money.

  • rate this

    Comment number 1108.

    It could be said that the minimum wage was a factor in attracting vast numbers of workers from Eastern Europe, a guaranteed wage 4x what they could earn at home.
    At the same time slower less productive workers tend to be eased out. What would be the impact of a big wage increase on that.

  • rate this

    Comment number 1107.

    I love the fact that all the high rated comments are as economically literate as a rather confused badger with a credit card and all the low rated comments speak about the proven economic disadvantages of arbitrary "limits" and the unintended consequences that itwill cause.

    The "Bury our heads brigade" out in force today :)

  • rate this

    Comment number 1106.

    Andy @1039

    In true (equal) democracy, those addicted to 'gaining or taking advantage', should have 'after-work clubs' - like casinos & opium dens of old, but perhaps safer if state-run - where 'consenting-SM-adults' could pool their day's wages, then enjoy win-back thrill or better or worse

    (Spouses & children protected, on independent incomes)

    (Hard-core best with monopoly money, in a clinic)

  • Comment number 1105.

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

  • rate this

    Comment number 1104.


    A simple solution would be to intriduce a wage differntial law - no employee (inc contractors/sub contractors) may earn say 10 or 20 times more than the lowest paid... one is worth that much more than anyone else

    I'd be more than happy to see aound 1,000 footballers and managers have their salaries reduced to 10x that of the lad that cleans their boots.

  • rate this

    Comment number 1103.

    As a carer for my elderly parents, I'm on £2.87 per hour for a 36 hour week (although of course I'm actually caring 24/7). I must be saving the Government so much in professional care, and yet I'm regarded as part of the onerous benefits bill to be cut to service a defecit caused by political ineptitude from both sides of Parliament.


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