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 1142.

    @1122. While you are completely right and though the quote was intended in an ironic context, if you redistribute the annual income of the top 5 earners in the UK, it is enough to give each of these people an extra £100.

    While capitilism and ambition can be good, greed and the obscene nature of some salaries taking large percentages of money out of circulation have the opposite effect.

  • rate this

    Comment number 1141.

    There may be an easy way to deal with the problem. MPs should be paid the average wage of their constituents, and employers the average wage of their employees.
    It would go somewhere towards being 'in it all together'.
    If that does not work, bulldozing the 'City' could be a good start in creating a new decent political economy.

  • Comment number 1140.

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

  • rate this

    Comment number 1139.


    ''...the employer would HAVE to pay a wage enough for people to do the job, would likely reduce wages of course...''

    Doesn't make any sense at all. I'm going back to bury my head in the sand...

    Before I go, how about raising NMW to a decent salary then scrapping tax credits so the taxpayer isn't subsidising companies to underpay their staff?

  • rate this

    Comment number 1138.

    5 Minutes ago

    Yes I know what it's called...and it doesn't work.

  • rate this

    Comment number 1137.

    I have no financial worries whatsoever.

  • rate this

    Comment number 1136.

    I used to work for a bank and they barely covered the national minimum wage. It was often the case the overtime was worked and unpaid and the result was a wage that would not reach the hourly rate required. Sadly this was indicative of the organisation in this branch.

  • rate this

    Comment number 1135.

    And it helps the economy not a jot. Poverty wages mean those in receipt of them cannot spend in the economy on anything other than essentials.
    Their low wages keep all wages low whilst being subsidised from the slight-better-off's taxes; they in turn cannot spend in the way they would otherwise.
    So we end up in an ever-downward spiral where no-one wins, not even business.

  • rate this

    Comment number 1134.

    "Probably, but I suspect many others would seek out jobs that they enjoy or which they are good at if the financial incentive to stay put was removed" But then how would you convince people to work in the undesireable jobs? Refuse Collector, Sewerage Worker, Miner etc if everyone was paid the same.

  • rate this

    Comment number 1133.

    From Equal Wages

    Good not to suggest 'usual' (Soviet / Chinese inequality & terror)

    But, of friends with money problems, just think

    Re-start: ownership & debts cancelled (patience!)

    Capital allocated for 'real' benefit (for 'profit' some spheres, cases competing)

    Castles, homes, cars, larger: rented, set affordable to all

    Market rates (decompress) on move / death

  • rate this

    Comment number 1132.

    more job share - whatever happened to this idea?

    It's alive and well! How do think we are in a double dip recession and jobless going down but productivity not going up! It's not rocket science.

  • Comment number 1131.

    All this user's posts have been removed.Why?

  • rate this

    Comment number 1130.

    Pay levels are worst in NI but we buy more new cars that any other part of the UK. Somebody must be getting fat off the back of working people.

  • rate this

    Comment number 1129.

    A lot of peoples biggest expense is housing whether renting or buying.I know someone who has invested in housing to rent out. He reckons when the economic situation improves he will be able to the rents up. He has already helped push the prices up by buying the properties in the first place. As well as building houses the government need to revisit the rental market.

  • Comment number 1128.

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

  • rate this

    Comment number 1127.

    Companies who don't pay their workers a living wage are relying on the State to top up their workers' income with benefits. In other words, the companies are being subsidised by taxpayers. That's either incompetence or it's taking the p***.

  • rate this

    Comment number 1126.

    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."

    Probably, but I suspect many others would seek out jobs that they enjoy or which they are good at if the financial incentive to stay put was removed.

  • rate this

    Comment number 1125.

    There have been times (during my life) when if a job turned out to be crap, you could jack and go get another one. Notice how in 'good times' these numbers don't appear - because people won't take this crap unless there's no alternative. God, I really wish the Brits would rage against the machine for once.

  • rate this

    Comment number 1124.

    worked out that i am being paid £8.20 per hour, where as in reality i am being paid £6.40 per hour, people need to realise that it is not the employer to blame for under paying people, it is infact the government raising the taxes inorder for them to pay for thier own mistakes and we are the ones that are suffering from it.

  • rate this

    Comment number 1123.

    There are plenty of companies out there who currently cannot trade paying more than the minimum wage.
    Most shop workers in London get MW and you only have to look along the High Streets to see, even paying MW is beyond some of these companies.
    Maybe if MW was done away with and the same with all benefits the housing market would drop to the level people could afford. That is called market forces.


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