The emerging economic recovery will have no effect on over 5 million workers unless employers pay a Living Wage, according to a new study of low pay and working poverty released today.
The first report of the Living Wage Commission, chaired by the Archbishop of York, Dr John Sentamu, will warn that spiralling living costs and stagnating wages at the bottom create a "double squeeze" on the lowest paid that will not be relieved by the recovering economy – with the taxpayer picking up the bill.
The report, Working for Poverty, has found that:
6.7 million of the 13 million people in poverty in the UK are in a family where someone works – over half the total for the first time
5.24 million workers in Britain – equal to 20% of the workforce – are paid below a Living Wage: an increase of 420,000, or 9%, over the last 12 months
Real average wages have grown by 13% since 1999, whereas economic output has risen by four times this rate
Housing costs have tripled in the last 15 years, one and half times the amount by which wages have risen, and electricity, gas and water bills have risen 88% in the last five years
2.9 million people classed as over-indebted have a household income below £15,000 a year.
Despite more workers falling into low pay, driven by low hourly rates more than lack of hours, economic output is increasing – showing that growth alone will not solve Britain’s low pay crisis, the report finds.
Archbishop Sentamu said today:
“The idea of making work pay is an empty slogan to millions of people who are hard pressed and working hard; but find themselves in a down-ward social spiral. They are often in two or three jobs just to make ends meet. Meanwhile the UK taxpayer picks up the bill in tax credits, in-work benefits and decreased demand in the economy.
“With the economy showing signs of recovery, employers that can pay a Living Wage must do so. They should choose between continuing to make gains on the back of poverty wages, or doing the right thing and paying a fair wage for a hard day’s work.”
The Living Wage Commission will release its final report in June 2014.
Notes to editors
The Living Wage Commission is a 12 month independent inquiry into the opportunities and barriers of the Living Wage. The Commission will be looking at the potential for an increase in coverage of the Living Wage, and looking closely at the business, economic and moral cases for paying the Living Wage.
The Living Wage Commission is chaired by the Archbishop of York, Dr John Sentamu, and includes Frances O’Grady (General Secretary, TUC), Adam Marshall (Director of Policy & External Affairs, British Chambers of Commerce), Victoria Winckler (Director, Bevan Foundation), Sir Stuart Etherington (Chief Executive, NCVO), Kate Pickett (Co-author, The Spirit Level; Co-founder of the Equality Trust), Guy Stallard (UK Head of Facilities, KPMG) and Wendy Bond (low paid worker representative).