LWC: Recovery set to fail 1-in-5 workers
10 Feb 2014 10:28 AM
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, warns 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:
* 6.7m of the 13m people in poverty in the UK are in a family where someone works – over half the total for the first time
* 5.24m workers in Britain – equal to 21% of the workforce – are paid below a Living Wage: an increase of 420,000, or 9%, over the last 12 months
* Housing costs have tripled in the last 15 years, one and a half times the amount by which wages have risen, and electricity, gas and water bills have risen 88% in the last five years
* 2.9m people classed as over-indebted have a household income below £15,000 a year.
Low paid workers have the smallest budget elasticity and are hit hardest by the "double squeeze" in rising prices and stagnating wages, the report finds. Wages became separated from economic output five years before the financial crisis in 2008, and while economic output is increasing, so too does the number of people paid below a Living Wage. These employees - 1 in 5 workers - will lose out from the economic recovery unless the squeeze on both wages and prices is removed.
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 downward 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.