Some 5.6 million people in the UK are paid less than the voluntary Living Wage, constituting 22 percent of all working people, according to new estimates published today by KPMG.
The proportion of employees earning less than the voluntary Living Wage has risen steadily from 19 percent in 2012, when this report began, to 22 percent in 2016, a 1.1 million increase. The total number of people earning below the Living Wage today does not differ tremendously from figures published last year, however it is still considerably higher than four years ago.
The research, conducted by Markit for KPMG, reveals that part-time jobs are three times more likely to pay below £8.25 per hour (or £9.40 in London) than full-time roles. Around 43 percent of part-time workers now earn less than the voluntary Living Wage, compared with around one-in-seven full-time workers (14 percent). Indeed the difference is so stark that despite accounting for less than one-third of all UK jobs, there are more part-time roles paying less than the Living Wage (3.1 million) than full-time jobs (2.5 million).
Regionally, Northern Ireland has the highest proportion of people earning below the voluntary Living Wage at 27 percent, followed by the East Midlands at 26 percent. The lowest proportion is in London and the South East, both at 18 percent, followed by Scotland at 19 percent.
However, by number of people rather than proportion, London (722,000), the North West (643,000) and the South East (624,000) are the most affected areas.
Simon Collins, senior partner and UK chairman, KPMG said:
“Today’s figures show that much more needs to be done if we are to eradicate in-work poverty. The reality is that more than 5 million working people in the UK are only earning enough to ‘get by’ and cannot enjoy the standard of life so many of us take for granted.
“Previously many businesses worried that increased wages hit their bottom line, but there is ample evidence to suggest the opposite. By paying the Living Wage we have seen improved staff morale, a rise in service standards, improved retention of staff and increased productivity.
“It is clear that it may not be possible or practical for everyone, but all organisations need to do what they can to address the problem of low pay. Of course, change cannot happen instantly, but making an initial assessment is an important first step.”
Katherine Chapman, Living Wage Foundation Director said:
“Today’s report shows that there are still millions of people who don’t earn enough to make ends meet, and many who feel that their finances are getting worse not better. That’s why the need for employers to go further than the government minimum to ensure their employees earn a real Living Wage is as important as ever. Tomorrow we’ll find out the new rates for the real Living Wage in London and the UK – leading to a pay rise for well over a hundred thousand workers in the nearly 3,000 companies that voluntarily commit to ensure their staff earn a wage they can really live on.”
The analysis also explored household finances between those earning below the Living Wage and those earning the Living Wage and above. It revealed that around three times as many people earning less than the Living Wage (25 percent) reported that their finances had worsened in October 2016 as those that experienced an improvement (8 percent).
However, the number reporting a drop in household finances has receded since 2015 (down from 33 percent). The results indicated that the degree of pressure on household finances was the lowest in five years of data collection, helped by the low inflation backdrop and more stable household debt trends.
Looking ahead, people earning less than the Living Wage forecast worsening financial wellbeing over the next 12 months, with more than two-thirds (68 percent) of people earning below the Living Wage expecting upward pressure on living costs over the year ahead. This index has picked up markedly from the survey-record low seen in 2015.
Historical overview of UK voluntary Living Wage estimates (all employee jobs)
||Number earning below voluntary Living Wage (millions)*
||Percentage of jobs below voluntary Living Wage*||UK voluntary Living Wage (£)||London voluntary Living Wage (£)|
** Markit estimates, rounded
Top six affected areas by proportion and number in 2016:
|By proportion||By number|
|Northern Ireland - 27%||London - 722,000|
|East Midlands - 26%||North West – 643,000|
|Yorkshire & Humberside - 25%||South East – 624,000|
|West Midlands - 24%||West Midlands – 523,000|
|North West - 24%||East of England – 519,000|
|North East - 24%||Yorkshire & Humberside – 511,000|
Nahidur Rahman, Senior PR Manager
T: +44 (0) 20 7694 8812
M: + 44 (0) 788191 6975
Christina Bridge, KPMG Press Office
T:+44 (0)20 7311 4252
M: +44 (0)778950 4905
Follow us on twitter: @kpmguk
KPMG Press Office: +44 (0)207 694 8773
Living Wage Foundation
Shazia Ejaz, Head of Media
T: +44 (0)20 7043 9886
M: +44 (0)795684 2683
Notes to Editors:
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 revenue of £1.96 billion in the year ended September 2015. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 155 countries and has 174,000 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 Foundation:
Only the real Living Wage is calculated according to the basic cost of living in London and the UK. Employers choose to pay this wage on a voluntary basis. The real Living Wage applies to all workers over 18 – in recognition that young people face the same living costs as everyone else. It enjoys cross party support.
The London Living Wage is currently £9.40 per hour. This figure covers all boroughs in Greater London. The UK Living Wage for outside of London is currently £8.25 per hour. These figures are calculated annually by the Resolution Foundation and overseen by the Living Wage Commission, based on the best available evidence on living standards in London and the UK.
The Living Wage Foundation is the institution at the heart of the independent movement of businesses, organisations and people who believe that a fair day’s work deserves a fair day’s pay. We recognise and celebrate the leadership shown by the nearly 3,000 Living Wage employers across the UK who voluntarily commit to ensure their staff earn a real Living Wage that meets the cost of living. We are an initiative of Citizens UK.
What is the voluntary UK Living Wage?
The voluntary UK Living Wage is an hourly rate of pay set independently and updated annually (not the UK government’s national living wage). It is calculated according to the basic cost of living in the UK, and employers choose to pay the Living Wage on a voluntary basis. According to the Living Wage Foundation, since 2001 the campaign has impacted over 120,000 employees and redistributed over £96 million to some of the lowest paid workers in the UK.