A recent study has found that almost six million people working in the UK are paid less than the recommended living wage.
While the living wage is representative of the cost of living in the UK, its rate is a recommendation to employers rather than being a legal requirement. This means that the living wage is not legally enforceable and its payment is decided upon by individual employers.
Conversely the national minimum wage is set by the Business Secretary each year on the advice of the Low Pay Commission and ensures that employers are legally required to pay their staff at least £5.30 per hour for 18 to 20 year olds, or £6.70 per hour for those over the age of 21.
The study has found that, while employers pay their staff the minimum wage, a huge number of workers in the UK are not earning the living wage, with part-time, female and younger workers being the most likely to miss out. This ‘worrying trend’ highlights the disparity in pay amongst these groups and also the millions of workers who are unable to live to a comfortable standard based upon the current cost of living.
The accountancy firm KPMG, which conducted the research, has also found that the percentage of staff earning below the living wage has increased year on year for the last three years.
Mike Kelly of KPMG has said that these figures demonstrate the high numbers of people who are forced to live hand-to-mouth, as the cost of living remains high and household finances remain tight. He believes that there is considerable ground yet to cover in eradicating in-work poverty.
He believes that although employers have expressed concerns about the impact of increased wage bills on the corporate bottom line, this will be mitigated by improved staff retention ratios and greater productivity.
While it may not be possible for all employers to pay their staff more, Kelly argues that many firms could do more to at least explore the feasibility of paying the living wage.
The Government has stated that it is “determined to move to a higher wage economy”, and has pledged to introduce a new compulsory national living wage for all workers aged 25 and above, which will come into force from April 2016.
However, this will still be considerably lower than the living wage promoted by the Living Wage Foundation which currently stands at £7.85 per hour across the country and £9.15 per hour for workers in London. The Government’s new national living wage will come in at £7.20 per hour, rising to £9 per hour in 2020.
A government spokeswoman for the new National Living Wage has said that its introduction will give a substantial boost to the wages of 2.7 million workers in the UK. The Treasury has calculated that someone working full-time should earn “over £4,800 more by 2020″ as a direct result of the new national living wage, with women and those living outside of London and the South East noticing the greatest impact when it comes into force.
Angela Eagle, Labour’s business secretary, has said that things are getting worse rather than better for many families across the UK and has called for more better paid, highly skilled jobs which pay a fairer living wage. She believes that the results of the KPMG study demonstrate that this is simply not happening.
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