Marianne Fallon, head of corporate affairs at KPMG
One in five workers in the UK is paid less than required for a basic standard of living, a report has said.
The proportion is much higher among waiters, bar staff and shop workers, at up to 90% of workers, the research for accountants KPMG suggested and that nearly five million people failed to command the living wage – a pay packet that enables most people to have a basic standard of living.
The rate stands at £8.30 an hour in London and £7.20 in the rest of the UK. This rate is voluntary, unlike the National Minimum Wage, which is currently £6.19 an hour for those aged 21 and over.
“Times are difficult for many people, but of course those on the lowest pay are suffering the most,” said Marianne Fallon, head of corporate affairs at KPMG, which has itself signed up to pay the living wage.
When looking at sectors of employers, some 90% of bar staff and 85% of waiters and waitresses failed to get as much as the living wage and some 780,000 sales and retail assistants were not paid to living wage level, the highest total of any group of employees, the report suggested.
Frances O’Grady, the incoming general secretary of the TUC, said: “It is shocking that in this day and age, one in five workers is still earning less than is needed to maintain a decent standard of living.
“Businesses should look at wages in a more innovative way”
Mike Cherry Chairman of the Federation of Small Businesses
The living wage is not a luxury, and means that low-paid workers do not have to make tough choices over whether they can afford the everyday things that most of us take for granted, such as their fuel bill or a winter coat for their children. Many more employers could afford to adopt the living wage, and it is hoped that many more decide to pay it in the coming months. Now, more than ever, is the time for employers to put an end to poverty pay.
Small businesses, however, see the situation somewhat differently. Mike Cherry, Chairman of the Federation of Small Businesses, said: “Every employer would want to be as reasonable as they possibly can, but in the current economic climate it is not going to be possible for those sectors that have traditionally been unable to pay the national minimum wage.” He said rent and rates were becoming more expensive, and so were energy costs, so the living wage was an aspiration but not affordable for some employers.
What can the Government Do?
The Government is basically staying neutral on this one, but shouldn’t they be more pro-active? If they encouraged businesses to pay the living wage, they would get 50% of the additional pay back in either taxes or reduced working tax credit payments. This windfall could then be used to give a National Insurance reduction to employers to reduce the extra wage burden, so ultimately everyone benefits.
So come on George Osborne, take this opportunity to make yourself popular for once and it won’t cost you a penny!
David Jones is the Senior Partner and Founder of Morgan Jones & Company. Born in Liverpool and an Accountancy graduate of the University of Wolverhampton, David spent twenty years working for the Customs & Excise in London then Shrewsbury before starting his own business. David's depth of knowledge of the UK tax system and his ability to communicate this learning has seen Morgan Jones & Company grow into Shropshire's most respected Accountancy Practice.