The Living Wage

By Levis on

Accountancy firm KPMG this week announced research that shows one in five workers in the UK are paid less than the ‘Living Wage’; this equates to some 4.82 million people.

In the current climate, low paid workers appear to be experiencing the hardest impact; over four in ten workers state that their finances are worse now than they were just one month ago.

The ‘Living Wage’ enables workers to afford a basic standard of living and is currently set at £8.30 an hour in London and £7.20 outside. This rate is voluntary, unlike the National Minimum Wage (the minimum amount that employers must pay by law), which is set at £6.19 an hour for workers aged 21 and over.

In 2001 the Living Wage Foundation was set up by two parents who wanted to remain in work but found that despite working two minimum wage jobs they were struggling to make ends meet and had no time for their community / family.  The Foundation aims to provide advice, support and accreditation to Living Wage employers.

Over 10,000 employees have been positively impacted by the Living Wage campaign since 2001 and over £96 million has been redistributed to some of the lowest paid workers in the UK.

The KPMG research has been published just ahead of Living Wage Week (4-10 November) when the new London and UK rates will be announced.

Regional analysis

The research finds that Yorkshire and Humberside has 440,000 people earning below the Living Wage (22%). This is joint third (with East Midland, North West and West Midlands) behind Northern Ireland who has the highest percentage of people earning under Living Wage at 24% and Wales who has the second highest percentage of 23%. The lowest proportion is in London and the South East at just 16% of workers receiving less than the living wage.

By proportion By number
Northern Ireland – London – 570,000
Wales – 23% North West – 570,000
East Midlands – 22% South East – 530,000
Yorkshire & Humberside – 22% West Midlands – 460,000
North West – 22% Yorkshire & Humberside – 440,000
West Midlands – 22% Eastern England – 440,000

Industry analysis

As you can see in the table below when the sectors of employers were considered, some 90% of bar staff and 85% of waiters and waitresses fail to earn as much as the living wage. However the report suggests that the group with the highest number of workers being paid below the living wage (780,000) is sales and retails assistants.

 By proportion*  By number
 Bar staff – 90% Sales and retail assistants – 780,000
 Waiters/waitresses – 85% Cleaners, domestics – 440,000
 Kitchen and catering assistants – 75% Kitchen and catering assistants – 340,000
 Launderers and dry cleaners – 75% Care assistants and home carers – 290,000
 Cleaners, domestics – 70% Goods handling and storage – 170,000
 Florists, floral arrangers – 70% Bar staff – 160,000

*occupational estimates rounded to nearest 5%

Whilst many employers would like to reward their employees as reasonably as possible, some critics have suggested that in the current economic climate it is just not a logical or possible solution when they cannot afford to pay minimum wage as it is.

Impact

The Living Wage Foundation’s website states several statistics that make for interesting reading…

  • 80% of employers believe that the Living wage had enhanced the quality of the work of their staff
  • 75% of employees reported increased in work quality as a result of receiving the Living Wage
  • 66% of employers reported a significant impact on recruitment and retention within their organisation
  • 25% fall in absenteeism following the introduction of the Living wage into contracted-out services

We will of course keep you updated of the new Living Wage rates next week. If you would like to discuss anything from the article please do not hesitate to contact our Employment Team at Leeds. If you are an employer considering implementing the Living Wage, then contact us.

For further information on the Living Wage go to http://www.livingwage.org.uk/home