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 1302.

    Probably already been said but this statistic can only be properly understood if other questions are answered:

    1. How many of the 5 million have another wage earner in the household

    2. Has analysis been done to consider tips etc.

    3. How do they calculate the living wage (whats included?)

    4. More regional analysis

    Not commenting on policy or moral issue just the stat

  • rate this

    Comment number 1301.

    If they receive £10 in tips for a 10hr day they earn the "living wage". £10 doesn't seem much to be tipped for a whole day, and no doubt many do less than 10hr days. I know plenty earning minimum wage that don't get tips...

  • rate this

    Comment number 1300.

    Billions of Chinese, Indian, Pakistani, Indonesian and Brazilian people would love to earn a wage at all.

    Thanks heavens life is so unfair.

  • rate this

    Comment number 1299.

    oh i see on here let`s beat the unemployed again as it there fault you idiot`s no one want`s to be unemployed it is what it is, and if you going to blame anybody blame the right people like the government and the banker`s cause let be right there no angels

  • rate this

    Comment number 1298.

    Tax Avoidance is not illegal, it is encouraged by successive governments in the form of ISA's among other things. Using Public Money to renationalise utilities is just another form of subsidy, it's no different to paying tax rebates - as is subsidising the cost of food.

  • rate this

    Comment number 1297.

    The careworker who commented, if I'm correct, shows the duplicity of her employer. The carers looking after my sister have to use their own cars, fund their own petrol & running costs and use their own mobiles, so the £7.21 hourly rate quoted is, in reality, a lot less. They effectively have to part-fund their own job.

  • rate this

    Comment number 1296.

    The whole reason were in this mess is the government messed in things it shouldn't, remove minimum wages + tax credits and yes short term people choose the dole, but this will tip the supply-demand curve towards the demand and that will result in wage rises until the supply comes back in line. That said, when did bein going the dole become a lifestyle option rather than just a saftey net?

  • rate this

    Comment number 1295.

    Renationlise the utilities companies and then ensure that basic living costs ie bread, milk and potatoes etc are within control even if it means subsidies. Who will pay for this? Why the richest 5-10% of the population. We need to go after these tax swindlers(tax avoidence!).

  • rate this

    Comment number 1294.

    Prices are going up, I say people need £20 per hour to live now.

  • rate this

    Comment number 1293.

    When a company can afford to pay its employees a living wage and chooses not to do so, it is not the same as slavery. However, it is a first step on the road in that direction. It is shameful.

  • rate this

    Comment number 1292.

    A big problem is the cost of housing a 2 bed flat is almost £1000 per month rent in the SE, a 'average' 3 bed home over £350,000!! Build more Homes until the supply brings rents down to £500 - £600 per month. people would have more disposable income and everyone standard of living would go up. DC is right when he says we can build a way to prosperity, but we need to see some action!

  • rate this

    Comment number 1291.

    @1287 dbuk2000
    "I know... harsh, but I got decent grades through my education and therefore went to a decent university."

    But you must realise that education begins with SOCIALISATION in the FAMILY. I wonder what values your parents and their parents had. Being 'middle class' isn't just about wealth - it's mainly 'attitude' (NOT genetics), which is inherited.

    Dumb 'em down to keep 'em down !

  • rate this

    Comment number 1290.

    1288. Khuli
    The average company in the UK has 6 employees which means you're not subsidising big business any more than the corner shop.
    1) Contract cleaners work in banks, on minimum wage
    Contract cleaners' get housing benefit
    Therefore I subsidise the bank
    2) Parent works in Tesco, limited hours
    Parent claims child benefit
    Therefore I subsidise Tesco
    ... or did I miss something?

  • rate this

    Comment number 1289.

    Just had a look on Wiki, out of 38 EU countries we are 8th highest payer of NMW which is not to bad. If you are on NMW think about going to Monaco, France, Belgium, San Marino, Ireland, Luxembourg or the Netherlands. They all pay more.

  • rate this

    Comment number 1288.


    And I don't see why my taxes should subsidise companies making large profits by paying their employees less than a living wage. And for that, I mean any wage that is eligible for top-up via tax credits.
    The average company in the UK has 6 employees which means you're not subsidising big business any more than the corner shop.

  • rate this

    Comment number 1287.

    I know this is harsh, but I got decent grades through my education and therefore went to a decent university. Although due to the economy I didnt get a job initially as I had no experience, eventually I did get a job and am now on 36k a few years later., If you are willing to go out and get qualifications and work on yourself for interviews you wont find yourself waiting tables/security guard.

  • rate this

    Comment number 1286.

    #1245 well 1. if you cant beat them join them and 2. your a mug working for peanuts and making someone else rich.

  • rate this

    Comment number 1285.

    When 80% of your salary evaporates by paying taxes VAT and energy bills it is not so much an issue of the minimum wage. You ask yourself: on what basis can a government take 80% of your fruit of labours?
    Technically a modern day slavery performed with high tech gadgets.

  • rate this

    Comment number 1284.

    Living wages ?
    The real strategy behind all this is to drop Western lifestyles and salaries, devalue currencies and decimate savings to bring us into line with the emerging economies.
    There is no reason that the West should dominate the world economy.
    The rich are raking it in, creaming-off everything they can to amass wealth so that they can buy us out when our economies flatline.

    Wait n see.

  • rate this

    Comment number 1283.

    re mine @ 1224
    Not at all.

    But, there are some well documented firms making large profits, patr of which is subsidised by tax-payer top-ups of their less than NMW wage structure. Some of them manage to turn a very nice profit yet pay no tax. A double-whammy for the UK taxpayer.


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