United Kingdom

Details

  • Service: Insights
  • Type: Press release
  • Date: 03/11/2013

Workers paid less than the Living Wage passes 5 million 

  • Number up to 5.24m from 4.82m a year ago

 

  • Nearly three quarters of 18-21 year olds affected

 

  • Women and part-time workers disproportionately affected

 

  • Regional ‘heatmap’ of the most affected areas

 

 

The problem of in-work poverty has been underlined today by new research which estimates that there are now 5.24 million people being paid less than the Living Wage, an increase of around 400,000 from an estimated 4.82 million in last year’s report.  This highlights the fact that whilst the Living Wage has grown rapidly and successfully as a concept, wider take-up is needed if more people are to earn a wage that supports a basic standard of living.

 

The research, conducted for KPMG by Markit, suggests that 21% of employees are being paid less than the Living Wage, up from 20% a year ago.   This has largely been driven by living costs outstripping earnings growth – median hourly wages have risen by just 1.1%, while the Living Wage rate increased last year by 3.5% nationally and 3% in London (also less than the rise in the cost of essential goods).

 

Unsurprisingly, the proportion of jobs paying below the Living Wage is highest among the younger age groups, with 72% of 18-21 year olds receiving less than the Living Wage, which then falls to 27% of 22-29 year olds.  Women are also significantly more affected than men (27% compared to 16%), while part-time workers are far more likely to receive low pay than full-time workers (43% compared to 12%).

 

The research also finds that sub-Living Wage pay is less prevalent for direct employees in the public sector (less than 10% of the workforce) than it is in the private sector (27%), largely due to differing job types.  In addition, many low paid workers in the public sector are employed by private contractors.

 

The Living Wage is a voluntary rate of pay designed to enable workers to afford a basic but acceptable standard of living.  The rate is currently £8.55 an hour in London and £7.45 outside – compared to the national minimum wage which stands at £6.31.

 

The Living Wage has been growing rapidly as a concept, with over 400 organisations now accredited payers of the rate compared to just sixty this time last year.  This week is ‘Living Wage Week’ with new Living Wage rates for London and the rest of the country due to be announced today, Monday 4 November.

 

Commenting on the findings Marianne Fallon, Head of Corporate Affairs at KPMG, said:“Low pay is a real problem in Britain, particularly at a time when the cost of living is rising at a faster rate than earnings.  This was underlined by the Social Mobility and Child Poverty Commission recently.  People on less than the Living Wage can seriously struggle to make ends meet.  Whilst it is still not easy, earning a Living Wage can make a huge difference to individuals and their families, enabling them to afford a basic standard of life. 

 

“For many businesses, paying the Living Wage rate need not actually cost any more.  At KPMG, we have found that better staff performance and motivation combined with lower absenteeism and turnover cancels out the extra salary costs.

 

“Living Wage Week is the perfect opportunity for employers to consider whether they can make the move.  It may not be possible or practical for everyone, but all employers need to do what they can to address the problem of low pay.  In practice, transition to the Living Wage is a phased programme that does not happen overnight.  Making an initial assessment is an important first step.”

 

Regional analysis

 

The research finds that Northern Ireland has the highest proportion of workers paid less than the Living Wage at 26% (2012 report: 24%) followed by Wales at 25% (2012: 23%).  The lowest proportions are in London at 17% (2012: 16%) and the South East at 18% (2012: 16%).  However, by number of people the North West, London, and the South East are the three most affected areas.

 

By proportion*

By number*

Northern Ireland – 26%

North West – 600,000

Wales – 25%

London – 586,000

East Midlands – 24%

South East – 567,000

Yorkshire & Humberside – 24%

West Midlands – 502,000

West Midlands – 23%

East – 497,000

 

*Source: Markit estimates, based on ONS data

 

Job sector analysis

 

Low-skilled service sector jobs predominate in terms of having the greatest proportion of workers paid less than the Living Wage.  The two worst-affected occupations are bar staff and waiters/waitresses – though an obvious caveat here is these workers will often earn discretionary tips on top of their wage (information not covered by the ONS data from which this analysis is drawn).  By number of workers, however, sales and retail assistants are the worst affected – with over 800,000 of them earning less than the Living Wage – followed by cleaners (450,000).

 

By proportion*

By number*

Bar staff – 85%

Sales and retail assistants – 810,000

Waiters and waitresses – 85%

Cleaners and domestics – 450,000

Kitchen and catering assistants – 80%

Kitchen and catering assistants – 370,000

Vehicle valeters and cleaners – 75%

Care workers and home carers – 270,000

Launderers and dry cleaners – 70%

Storage/warehouse occupations – 170,000

 

*Source: Markit estimates, based on ONS data

 

Impact of low pay on personal finances

 

Analysis drawn by Markit for KPMG from their Household Finance Index underlines the strain that earning less than the Living Wage puts on individuals’ finances:

 

 

  • 38% of respondents earning less than the Living Wage have seen a deterioration in their financial health over the last month

 

  • 51% of them expect their finances to worsen over the coming year

 


  • This compares to 23% and 36% respectively of those earning more than the Living Wage

 


  • Nearly a quarter (22%) of those earning less than the Living Wage reported an increase in debt over the past month

 

 

Across the board (those earning both above and below the Living Wage) there is a clear perception that the cost of living has risen and will continue to rise. 

 

One of the only bright spots in the analysis was that respondents felt less downbeat about their job security than they did a year ago – an indication that underlying economic conditions are more favourable now than in October 2012.

 

Rhys Moore, director of the Living Wage Foundation, said: “The Living Wage has grown rapidly as a concept in the last year and has attracted considerable support.  I would like to thank all 400 organisations that are accredited payers and, with Living Wage Week now upon us, call on more organisations to look to the welfare of their lowest paid staff and move to the Living Wage.

 

“The research is a timely reminder of the size of the challenge of low pay in Britain. The growth in part time employment is a feature of the economy that is here to stay and employers must consider wage differentials with full time workers.  However, this is not to undermine the real progress made elsewhere.”

 

-ends-

 

Notes to editors:

 

Markit’s research was based on the Office for National Statistics’ Annual Survey of Hours and Earnings for 2012, which was based on approximately 182,000 returns. The ASHE includes percentile wage bands for each occupation, to illustrate the broad distribution of earnings within a particular grouping. This highlights patterns of hourly earnings below the Living Wage for a given occupation (and within a particular UK region). This work contains statistical data from ONS which is Crown Copyright. The use of the ONS statistical data in this work does not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data.

 

The Markit Household Finance Index survey was carried out in October 2013 amongst approximately 1,500 individuals aged between 18 and 64.

 

For more detail on the methodology behind the estimates and the Markit Household Finance Index survey, please see the full 2013 Living Wage report which is available at www.kpmg.com/uk/livingwage

 

Further information on the Living Wage and Living Wage Week is available at www.livingwage.org.uk

 

Media enquiries to:

 

Mark Hamilton, KPMG Corporate Communications                            020 7694 2687

mark.hamilton@kpmg.co.uk                                                               07785 337672

 

 

About KPMG

 

KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff.  The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 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.  KPMG International provides no client services.

 

About Markit

 

Markit is a leading, global financial information services company with over 3,000 employees. The company provides independent data, valuations and trade processing across all asset classes in order to enhance transparency, reduce risk and improve operational efficiency. Its client base includes the most significant institutional participants in the financial marketplace.  For more information, see www.markit.com

 

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Living Wage research for KPMG 2013 report

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