One in five earning below voluntary living wage, report reveals

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One in five workers are being paid below the voluntary living wage, leaving them struggling to escape in-work poverty, a new report reveals.

Around 22% of jobs in the UK pay below the voluntary rate of £9.75 an hour in London and £8.45 in the rest of the UK, both well above the statutory national living wage of £7.50 for over 25-year-olds, said KPMG.

The auditing giant estimated that 5.5 million workers were on less than the voluntary rate, down by 100,000 on a year ago - the first reduction in five years.

One in four women earn less than the voluntary rate compared with 16% of men, while more than two out of five part-time workers don't get paid the higher figure, said the report.

Northern Ireland has the highest proportion of jobs earning below the voluntary rate at 26%, followed by the Midlands, Wales and Yorkshire and the Humber, all around 24%.

Andy Bagnall, director at KPMG, said: "Today's figures show that more work needs to be done if we are to eradicate in-work poverty. It's unfortunate that in 2017 more than five million working people in the UK are earning below the real living wage and cannot enjoy the standard of life so many of us take for granted.

"In the past, many businesses were worried that increased wages would hit their bottom line, but there is ample evidence to suggest otherwise. By paying the real living wage since 2006 KPMG has seen improved staff morale, a rise in service standards, improved retention of staff and increased productivity. More importantly, it has been an enabler for social mobility."

Katherine Chapman, director of the Living Wage Foundation, which sets the voluntary rate, commented: "Today's figures show that, whilst moving in the right direction, there are still 5.5 million people earning less than the real living wage across the UK and with the cost of living increasing as inflation rises, those on lowest incomes are really feeling the squeeze."

The foundation will announce new rates on Monday.

Shadow chancellor John McDonnell said: "The last seven years of Tory economic failure has seen wages stagnate, with 7.4 million people in working households in poverty, and nearly four million children living in poverty across the country.

"Despite increases in the costs of living, Tory failure means real wages are lower today than in 2010.

"Living standards are set to fall over the course of this Parliament, and the Government is offering no real solutions, which means that the living wage will be a vital lifeline for the low-paid."

A Department for Business, Energy and Industrial Strategy (BEIS) spokeswoman said: "The National Living Wage has delivered the fastest pay rise for the lowest earners in 20 years - at a rate that balances the interests of workers and business.

"We welcome employers choosing to pay their staff more than this when they can afford to do so, including at the Living Wage Foundation's voluntary rate."

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