5 Million Below Living Wage

Nearly 5 million people are now earning less than the Living Wage, according to the latest research from the Resolution Foundation.

Low Pay Britain 2013 - Report into the current state of the Living WageA report into the state of low pay in the UK has found that the economic downturn has forced a further 1.4 million employees below the Living Wage.

The Living Wage is the rate deemed necessary for a basic standard of living and it is higher than the national minimum wage.

Currently the national minimum wage stands at £6.19 an hour and is to rise to £6.31 an hour in October 2013.

The Living Wage is £7.45 outside the capital and stands at £8.55 in London.

The figure for the Living Wage is calculated and set by two different organisations: The London Living Wage is set by the Greater London Authority whilst the UK Living Wage is set by the Centre for Research in Social Policy at Loughborough University.

The report from the Resolution Foundation entitled Low Pay Britain 2013 shows that the number of employees earning below the Living Wage has leapt from 3.4 million in 2009 to 4.8 million today.

In proportionate terms, four years ago 14 per cent of the workforce earned less than the Living wage. Now that figure stands at 20 per cent.

Low Pay Britain 2013 provides detailed analysis of the 25 million employees in the UK, looking at pay by age, gender, business sector and region.

The report finds that the workers most at risk of being paid less than the Living Wage are:

  • female
  • young workers (aged 16-20)
  • living outside London & the South East of England

One in four female employees earn less than the Living Wage, amounting to 2.9 million workers.

A massive 77 per cent of the under 20s earn below the Living Wage.

Just 16 per cent of workers in London & the South East were paid under the Living Wage whilst most parts of the country the figure was more than 20 per cent. In Wales that number rose to 23 per cent.

Looking at business sectors, the report found that the hotel and restaurant sector was most likely to have employees paid under the Living Wage whilst public administration and the defence sector fared the best.

The report comes at a time that political parties discuss ways to raise the national minimum wage as the cost of living rises beyond the level that many employees receive pay increases, if at all.

Other concerns revolve around the rise of zero hour contracts, after the Chartered institute of Personnel and Development (CIPD) highlighted that ONS figures of just 200,000 workers on zero hour contracts was well short of the mark.

Business Secretary Vince Cable expressed his concerns that the figures showed as many as a million workers could be in zero hours contracts, with no guarantee of actual work, steady level of income, or regular hours.

The Low Pay Britain 2013 report adds to these concerns with its own observation of a possible two-tier system where the lower tier is characterised by low-paid, low-skilled workers. The work is often temporary, part-time or workers are self-employed.

The Resolution Foundation is reviewing the national minimum wage and is expected to report its findings in the new year.

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