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 1282.


    Secondly, the balance of power now firmly sits with corporations at the expense of individuals... A more equitable distribution of wealth would solve this problem
    Please explain how you having a bit more money gives you any more power, or corporations any less. And what power do they have that you think you should have instead?

  • rate this

    Comment number 1281.

    The push for increased profit drove jobs over seas were workers were cheap and health and safety non existent with CEOs taking disproportionate bonuses theses have resulted in higher costs and loss of market capacity in the west the natural consequence of short sighted greed and rise of liquid fund investors with no real purpose only to feed the demand for profit. greed be getting greed.

  • rate this

    Comment number 1280.

    1180. Blythkeith
    1 HOUR AGO
    "Too much of the Welfare budget is spent on benefits for those in work"


    Thats because the Great and Wonderful British Employer wont pay a decent wage

  • rate this

    Comment number 1279.

    As valued as bar and waiting staff are, with no disrespect meant towards them, the greater concern should be that Care and Support staff of vulnerable adults (and children) are often paid even less. A search for vacancies as a support worker shows rates advertised between £6 and £7 per hour. This is to work to support extremely vulnerable people in our society. It's just plain wrong!

  • rate this

    Comment number 1278.

    BBC Audience Services Department, outsourced by the BBC to Capita PLC employ people at a starting wage of £12,500PA. This means they're earning £6.41 PH. Nice one BBC, you've reported on something you're doing yourself.

  • rate this

    Comment number 1277.

    UK is out of kilter in at least two respects. Firstly the income gap between top and bottom is far too great and requires rebalancing. Secondly, the balance of power now firmly sits with corporations at the expense of individuals (the latter being who governments are elected to serve). A more equitable distribution of wealth would solve this problem.

  • rate this

    Comment number 1276.

    I agree, like many companies Corals used to be a good company to work for until Private Equity took over, demanded more from the staff for less money and cut customer perks (no you can't have a free coffee eventhough you have been a customer for 20 years). The experienced staff all left and they replaced them with youngsters who were cheaper. The joys of capitalism eh!

  • rate this

    Comment number 1275.

    Unfortunately with live in a laissez faire, survival of the sneakiest, world.

    No one is seriously trying to re organise or rebuild Britains economy, they are just tweaking polciy levers, and hoping that some magical manufacturing fairy will come along and solve their problems.
    Too late, Thatcher and others allowed factories and businesses to close in UK, and they won't be back..

  • rate this

    Comment number 1274.

    And people down the street haven't worked a day in their life, have more disposable income and leasure products than I could ever dream of, something wrong here!
    I don't believe these stories. I know some families on benefits as well and they are poor and desperate to climb out. Are you sure you haven't been watching an episode of Shameless?

  • rate this

    Comment number 1273.

    There aren't many Jobs here that pay any sort of a Wage/Salary. Even those that there are could pay a high Hourly rate and still leave a person struggling coz they are p/t.
    The Tory Government's idea of "making Work pay" is to make Welfare Benefits pay less. But that doesn't make Work pay any more than it does now, and it doesn't create a single Job either.

  • rate this

    Comment number 1272.

    1264. If you were in that position and taking home less than a grand a month, you were being exploited, plain and simple. My guess is you put up with a lot before then though. And that's five years ago, when the economy was good.

    People get exploited, and often won't realise it until later. This is why it annoys me when people act like the market will provide if only we let it.

  • rate this

    Comment number 1271.

    While everyone in a low paid job is competing with the rest of the eastern Europe, wages will never go up.

    Until we have control of immigration, wages will go down!

  • rate this

    Comment number 1270.

    It's not the minimum wage which is wrong, it's the cost of everything which is the issue. Energy companies picking up £1b profit a year, clothing companies making 75% mark up on every item, car companies making 65% mark up. Capitalism is slowly but surely killing off the western world. Socialism is radical but its the only way to keep this country from being consumed by corporate bullies.

  • rate this

    Comment number 1269.

    Seen some wanting wages to 'just' cover their mortgage and childcare costs etc! Crazy attitude. All that would happen is houses could be bid up more expensive, adding to the so called basic costs to no gain at all. Children are expensive especially if you pay the newly industrialised child care business rather than look after your own. Spending, choices, not income, matter. Live within your means.

  • rate this

    Comment number 1268.

    #1259: "Tesco makes huge profits, but you and I subsidise their wages bill - as so many employees receive top-up benefits."

    Indeed - government controls distorting the free market. There are, unfortunately, far too many vested interests in making the tax and benefits system more and more complex. How many accountants would be out of work if there was one simple, flat tax for all those in work?

  • rate this

    Comment number 1267.

    It would be much fairer and cheaper to the taxpayer if all low income people did not pay income tax at all, in fact no one should pay tax until they earn at least £15,000 a year, £20,000 if you have children. This would save the benefits agency calculating top up benefits.

  • rate this

    Comment number 1266.

    'benifits'??? This is the standard of spelling for an Editor's choice?????

  • rate this

    Comment number 1265.

    1255: Lottery has not paid out on winning plus Five tickets yet......

    I'm getting dyslexic appendages !
    What we are currently enjoying is called Stagflation, ie high cost of living Inflation with low or no pay inflation (see Japan's lost decade)
    Unless your rich and likely American, none of this is a good thing.

  • rate this

    Comment number 1264.

    I'd work in a shop anyday over a bookies. Being threatened in the street because a punter lost and they have been the pub isn't much fun. I used to get abused once a month. The final straw was being told I was changing region which would have cost me £100 month extra in travel costs without any extra salary. I got another job quickly!

  • rate this

    Comment number 1263.

    Well: trying to inflate away the debt and push up property didn't quite take off.

    QE pushed up a few prices, but the UK workforce is so cowed, that wage inflation never came into play, so it fizzled out.

    It would seem the tories have been hoist by their own petard on this point, and perhaps explains the move.

    I doubt it will be well received by most firms though.


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