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UK wage-levels falling, says report

06 September 2013

by a staff reporter


Hand-holding: Andrew Marr interviews the Archbishop of York, Dr Sentamu, for The Andrew Marr Show, which was broadcast last Sunday

Hand-holding: Andrew Marr interviews the Archbishop of York, Dr Sentamu, for The Andrew Marr Show, which was broadcast last Sunday

TWENTY per cent of the workforce in the UK is earning less than the living wage, a new report suggests.

Since 2009, a further 1.4 million people have fallen below the level set for a living wage, taking the total number earning below what is deemed the amount needed for a basic standard of living to 4.8 million.

The report Low Pay Britain 2013, by the think tank the Resolution Foundation, said that young people, women, and those outside London and the south-east were most at risk of low pay.

The living wage was calculated at £7.20 an hour outside London, and £8.30 in the capital for the period covered by the report. Since it was compiled, the living wage has risen to £7.45 an hour outside London, and £8.55 in the capital. Pay below this level is commonest in the service sector, in hotels and restaurants; and among 16-to-20-year-olds and women, who are more likely to work part time.

The author of the report, Matthew Whittaker, says that its findings prove the existence of a "two-tier Britain", where the lower tier is made up of low-paid, low-skilled work which is often temporary, part-time, or for the self-employed. The early signs of an economic recovery have failed to halt this trend, and rates of part-time and temporary work are still high.

Since 2009 - the height of the recession - the average hourly wage for a new employee has dropped from £8.42 to just under £8.

Mr Whittaker, who is a senior economist at the Resolution Foundation, said: "For most of the working population, real wages have been flat or declining for many years, and, as a result, more and more people have dipped below the level of the living wage. This means an increasing struggle to keep up with the cost of living.

"Britain has a sorry story to tell on low pay. Only a handful of our close competitors do worse, and the large majority have much lower rates of low pay - sometimes half as much. The challenge for all political parties is to find ways of boosting rates of pay, especially for those who earn less, without putting economic growth at risk."

Mark Littlewood, of the Institute of Economic Affairs, criticised the report's approach, saying that many of those earning less than the living wage lived in high-income households, with a partner who earned an above-average salary.

The Archbishop of York, Dr Sentamu, is chairing an independent commission on the future of the living wage. In an interview with Andrew Marr on BBC1, he said: "The trouble is, in this country, the income disparity between those who are earning very low, and those who are earning very high is so vast. Whenever there is an unfair income-spread, then society is never at peace with itself."

The report also identifies a new trend towards higher wages for older workers, aged over 60. In the mid-1990s, about 37 per cent of this group received low pay; by 2012, that had fallen to 24 per cent. Over the same period, the number of low-paid employees under 30 years old has climbed steadily - from 26 per cent to 37 per cent in 2012. The report suggests that this shift may be because of the growth in student employment among younger people, and a general increase in employment among older people, with those working beyond the age of 60 being higher-skilled and more highly paid than in the past.

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