More UK workers earning less than living wage, research shows

Treasury Minister David Gauke and Shadow Chief Secretary to the Treasury Rachel Reeves discuss how best to help workers

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The number of UK workers earning below the so-called living wage has risen to 4.8 million, research suggests.

The figure, equivalent to 20% of employees, is up from 3.4 million in 2009, the Resolution Foundation think tank said.

The living wage is set at £7.45 outside London and £8.55 in the capital.

Labour said too many people were "poorly paid", but ministers said cut taxes on low incomes were helping many people's standard of living.

Although employers are obliged to pay the minimum wage, there is no legal requirement to pay the living wage.

'Sorry story'

The left-of-centre Resolution Foundation said that it had used the most recent figures available, when the benchmark was calculated as £7.20 an hour outside London and £8.30 in the capital.

It found that 25% of women and 15% of men were paid below the living wage in 2012 - up from 18% and 11% in 2009.

The think tank also found that 77% of employees aged under 20, and two-thirds of restaurant and hotel workers, earned less than the living wage.

Report author and economist Matthew Whittaker said: "For most of the working population real wages have been flat or declining for many years and as a result more and more people have dipped below the level of the living wage.

"Britain has a sorry story to tell on low pay. Only a handful of our close competitors do worse and the large majority have much lower rates of low pay - sometimes half as much."

In a speech on Tuesday, Labour shadow Treasury minister Rachel Reeves said research by the House of Commons library suggested 60% of new jobs created since May 2010 had been in low-pay sectors, where median hourly pay was less than a quarter of the national hourly median.

'Flat-lining'

She accused ministers of presiding over an "economy that, for far too many people, seems only to offer work that is insecure, poorly paid and - in the worst cases - simply exploitative".

And in an article for the Guardian newspaper, shadow chancellor Ed Balls wrote "two quarters of positive growth does not begin to repair the damage from three years of flat-lining".

Labour will lead an opposition debate on the economy after prime minister's questions on Wednesday in which it will argue that the government is failing to recognise the difficulties faced by hard-working families.

The party has asked Alan Buckle, chairman of KPMG International, to consider how a future government can best work with employers to enable more of their staff to earn a living wage, including the introduction of "living wage zones".

The BBC understands the Conservatives are themselves considering ways of increasing the minimum wage, with measures being considered including offering tax breaks to companies paying a wage level higher than the current national minimum of £6.19 an hour.

But the government insists that it has already done more for the low-paid than its predecessor by committing to raise the starting level at which people pay income tax to £10,000 - contrasting this with Labour's decision to scrap the 10p tax rate in 2009.

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