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
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
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
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
"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
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.