Increase in number of people on low pay

The number of people on low pay has risen by 147,000 to 5.3 million in the last year, according to new research.

The number of people on low pay has risen by 147,000 to 5.3 million in the last year, according to a study by KPMG.

The research indicates that 22 per cent of employees are now earning less than the Living Wage – up from 21 per cent last year.

According to the data, part-time, female and young workers are the most likely to be earning a wage that fails to provide a decent standard of living.

The research, conducted by Markit for KPMG, also found that the proportion of people earning less than £7.65 per hour (£8.80 in London) is higher amongst part-time workers. More than 4 in 10 part-time workers take home less than the Living Wage, compared to 13 percent of full-time employees.

There are also more part-time roles paying less than the Living Wage (2.98 million) than full-time jobs (2.29 million), despite making up less than a third of all UK jobs.

The research revealed that during October of this year almost three times as many people who earned less than the Living Wage (29 per cent) reported that their household finances had worsened over the month, compared to just 10 per cent who saw an improvement. Meanwhile, twice as many people who earn below the Living Wage (18 per cent) reported an increase in their need to borrow, compared to 9 per cent who saw a reduction.

The financial outlook for many remains bleak. Five per cent of those earning less than the Living Wage said they expected to see their household finances worsen between now and November 2015. Almost a quarter (22 per cent) also reported fears over job security.

Commenting on the research, head of Living Wage at KPMG Mike Kelly said:

“Although there are almost 1,000 organisations pledged to pay a Living Wage, far too many UK employees are stuck in the spiral of low pay.

“With the cost of living still high the squeeze on household finances remains acute, meaning that the reality for many is that they are forced to live hand to mouth.  Inflation may be easing, but unless wages rise we will continue to see huge swathes of people caught between the desire to contribute to society and the inability to afford to do so. 

“For some time it was easy for businesses to hide behind the argument that increased wages hit their bottom line, but there is ample evidence to suggest the opposite – in the shape of higher retention and higher productivity.  It may not be possible for every business, but it is certainly not impossible to explore the feasibility of paying a Living Wage.”

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