Some 5.84 million people are paid less than the Living Wage, according to new research published today by KPMG. The latest figure indicates that 23 percent of all employees now earn less than the Living Wage - up from 22 percent last year and 21 percent the year before.
Although the rise sounds modest, in real terms it equates to 497,000 people. During the same period, the total number of jobs grew by 435,000 to just over 25 million. The proportion of workers earning less than the Living Wage has risen for the third year running. The data also belies 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.
The research, conducted by Markit for KPMG, shows that part-time jobs are three times as likely to pay below £7.85 per hour (or £9.15 in London) as full-time roles. Despite accounting for less than one-third of all UK jobs, there are more part-time roles paying less than the Living Wage (3.205 million) than full-time jobs (2.623 million).
For three years in a row, the research finds that women are considerably more likely to be paid below the Living Wage than men. With nearly 280,000 more women in work than last year, this year’s data shows that an estimated 29 percent of females earn less than the Living Wage, compared with 18 percent of males.
With more young people employed than last year, the analysis shows that younger workers remain the most likely group to be caught in the ‘working poverty’ trap. 72 percent of 18-21 year olds are currently earning less than the Living Wage, compared to just 17 percent of those aged 30-39. In real terms this equates to 880,000 employees of traditional university age failing to earn enough to support the purchase of basic necessities.
Mike Kelly, Head of Living Wage at KPMG, said: “The past year has seen some notable achievements, with 2000 employers, including more than a quarter of the FTSE 100 now accredited by the Living Wage Foundation. Awareness of the issue has also increased, with more than 3 out of 4 of the general public in the know about what the Living Wage is. ”
“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. The figures released today show that there is still more to be done if we are to eradicate in work poverty.
“For some time it was easy for businesses to hide behind the argument that increased wages hit their bottom line, but there is ample evidence to suggest the opposite – in the shape of higher retention and higher productivity. It may not be possible for every business, but it is certainly not impossible to explore the feasibility of paying the Living Wage.”
This year’s research also revealed that, during October 2015, four times as many people earning less than the Living Wage were downbeat about their household finances than were positive, even more so than they were in October 2014. The finger pointed towards worries about the rise in debt levels and pessimism regarding job security. By contrast, around 30 percent of people earning above the Living Wage anticipate an improvement in their household finances during the next 12 months.
Notes to editors:
Nahidur Rahman, KPMG Press Office
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KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 12,000 partners and staff. The UK firm recorded a turnover of £1.9 billion in the year ended September 2014. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 162,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
About the Living Wage research
The Office for National Statistics (ONS) Annual Survey of Hours and Earnings was used as the data source to estimate the national, regional, sub-regional and job sector distribution of hourly earnings below the Living Wage. Markit’s regular UK Household Finance Index (HFI) survey of 1,500 respondents within the UK was used to compile figures for financial conditions among those either side of the Living Wage threshold. The methodology section outlines how Markit Economics used these data sources to produce the statistics contained in the main research.
What is the Living Wage?
Employers choose to pay the Living Wage voluntarily. It is an hourly rate of pay set independently and updated annually. It is calculated according to the cost of living in the UK. The calculation takes into account things like accommodation, travel, healthy food and little extras like birthday presents.
The Living Wage enjoys cross party support. In the UK the modern Living Wage movement began in 2001 and is led by Citizens UK and the Living Wage Foundation. The current UK Living Wage is £7.85 an hour. The current London Living Wage is £9.15 an hour.
The Living Wage is reviewed each year and the new rate is announced in November during Living Wage Week. Employers that have put the Living Wage in place report a range of business benefits including lower staff turnover, higher team morale and higher productivity.
What about the Government’s national living wage?
In July 2015 the Chancellor of the Exchequer announced that the UK Government will introduce a compulsory ‘national living wage’. This new government rate is a minimum wage premium rate for staff over 25 years old. It will be introduced from April 2016 and the rate will be £7.20 per hour. The rate is separate to the Living Wage rate calculated by the Living Wage Foundation. The government rate is based on median earnings while the Living Wage Foundation rate is calculated according to the cost of living.