Workers are caught in low pay spiral

Nov 03, 2014

The figures, released by analysts at business adviser KPMG, show a small reduction of 0.2% on last year and are around 2% below the figure for 2012.

The new figures have been revealed ahead of a Living Wage event scheduled to take place tomorrow (Tuesday) which will call on policy makers to make MIlton Keynes a Living Wage zone, similar to Canary Wharf in London.

KPMG says that across the UK In the UK, some 5.28 million people  are paid less than the Living Wage of £7.65 per hour (£8.80 in London).

The figure equates to 22% of the workforce – a 1% rise on 2013 – and includes a worrying trend which sees part-time, female and young workers as the most likely to earn a wage that fails to provide a basic but decent standard of living.

Around 40% of part-time workers take home less than the Living Wage, compared to only 13% of full-time employees.

The research, conducted by Markit for KPMG, shows that women are more likely to be paid below the Living Wage than men.  One in four women earn less than the benchmark, compared to 16% of men. 

And although the number of young unemployed continues to fall, analysis of the data indicates that younger workers remain the most likely group to be caught in the ‘working poverty’ trap. 

A total 72%  of 18-21 year olds earn less than the Living Wage, compared to 15% of those aged 30-39

Karl Edge (pictured), KPMG’s senior partner in Milton Keynes, said: “Although there are almost 1,000 organisations pledged to pay a Living Wage, far too many UK employees are stuck in the spiral of low pay.

“With the cost of living still high, the squeeze on household finances remains acute, meaning that the reality for many is that they are forced to live hand to mouth.  Inflation may be easing, but unless wages rise we will continue to see huge swathes of people caught between the desire to contribute to society and the inability to afford to do so.”

Businesses can no longer hide behind the argument that higher wages hit their bottom line, he added. Wage increases encourage higher staff retention and productivity.

“It may not be possible for every business, but it is certainly not impossible to explore the feasibility of paying a Living Wage,” Mr Edge said.

The study also found that the household finances of those earning below the Living Wage had worsened. Demand for unsecured credit has risen, with twice as many people earning below the Living Wage reporting an increase in their need to borrow.

And pressure on finances is also something many say will last beyond the short-term. 

Alan Milburn, chair of the Social Mobility and Child Poverty Commission said: “This research is further proof that more workers are getting stuck in low paid work with little opportunity for progression.

“It is welcome that the number of accredited Living Wage firms has increased.  But far more needs to be done to help millions of people move from low pay to living pay.

“Employers and government both have a key role to play." 

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