One in five workers is paid less than the living wage

The UK's economic squeeze has left a fifth of workers eking out an existence on less than the living wage, a shocking study to be published today will reveal.

That amounts to 4.8 million people working for less than £8.30 an hour in London, and £7.30 outside – income levels that are designed to enable employees to be able to afford a basic standard of living.

The research is being published ahead of Living Wage Week, which starts on 4 November and will see new rates announced for London and the rest of the country.

A number of employers have voluntarily adopted the independently calculated standards, which compare with the statutory national minimum wage of just £6.19 an hour. But that has been dismissed as hopelessly inadequate by campaigners, who report low-paid workers across Britain are bearing the brunt of a brutal double-dip recession that has been characterised by a squeeze on incomes combined with rising taxes and high levels of inflation.

The study, carried out by Markit on behalf of accountancy giant KPMG, reported bar staff, restaurant workers, catering and retail staff had been worst affected by the downturn. Official figures showed the UK economy roared back in the last quarter, surprising economists with growth of 1 per cent after a bleak first half of the year.

But any benefits are evading those earning low incomes in the UK, the report showed, with four in 10 low-paid workers admitting their finances are worse now than they were just a month ago. By proportion of the population, Northern Ireland has the highest level of people earning wages beneath the living wage level, closely followed by Wales (23 per cent). London and the North West are the highest by number with 570,000 each.

Some 38 per cent of respondents below the living wage say they have poorer cash availability now than a month ago, compared with 27 percent of those earning above, indicating that the recovery is failing to benefit those most in need.

So far, 100 organisations have agreed to pay all staff at least the living wage. But Rhys Moore, director of the Living Wage Foundation, warned many more employers needed to sign up.