Living Wage Week - Plunging New Depths

04 November 2015 | Updated 01 January 1970

A rise of 1% of those below the Proper Living Wage has been reported in the latest study by KPMG - that's nearly half a million people more struggling to make ends meet.

The research by Markit for KPMG – entitled Living Wage Research for KPMG – has found that approximately 5.84 million people are paid less than the Living Wage - or the Proper Living Wage as ThisWeekinFM is proposing as a title to counter the government's (laughable) National Living Wage.

The latest figure shows that 23% of all employees now earn less than the Living Wage which is an increase of 1% from the year before. KPMG states that ‘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.)

Behind the headline figures, the study shows some worrying aspects:

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.
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% of females earn less than the Living Wage, compared with 18% 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% of 18-21 year olds are currently earning less than the Living Wage, compared with just 17% of those aged 30-39. The report argues that in real terms this equates to 880,000 employees of traditional university age failing to earn enough to support the purchase of basic necessities.

“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,” stated Mike Kelly, Head of Living Wage, KPMG. “It may not be possible for every business but it is certainly not impossible to explore the feasibility of paying the Living Wage.”

The government has fought back with its own figures. A spokeswoman argued that the government’s new National Living Wage would give a ‘direct boost’ in wages for 2.7 million people in the UK, ensuring a full-time worker would earn over £4,800 more by 2020. “Treasury analysis shows women and those based outside London and the South East will be the biggest winners when the new national living wage comes into force,” stated the government spokeswoman.

Risk by government

Doubt was cast on the impact of the government’s National Living Wage by the CBI’s retiring Director General, John Cridland. In his leaving message he made his fears clear. “Now I’m leaving at a time when the prospect of a National Living Wage is a big worry to business. It’s a laudable objective, but a wage increase of 7.5% next year followed by increases of around 6% each and every year to 2020 are a gamble, when forced productivity growth means replacing people with automation. It could cut off routes of progression for unskilled youngsters and women returnees seeking to re-enter the labour market.”

Picture: Parting shot from the CBI’s retiring Deputy Director, John Cridland – “the prospect of a National Living Wage is a big worry to business”

Article written by Mike Gannon | Published 04 November 2015