The proportion of workers not being paid the living wage is rising

Jon Stone
Monday 12 October 2015 09:50
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The Government says it supports the living wage
The Government says it supports the living wage

The proportion of workers who are not being paid the living wage is actually increasing, official statistics show.

The Office for National Statistics said six million workers in Britain are paid under the hourly rate, which is calculated to cover the basic cost of living.

“In 2014, there were some 6 million employee jobs paid less than the living wage in the UK. Over half of these were part-time jobs,” the ONS said.

Between April 2008 and April 2010, the proportion of jobs paid less than the living wage in London was stable at around 13%, but it had risen to 19% by April 2014.

For the rest of the UK, where only 3 years of estimates are available, the proportion of employee jobs paid less than the living wage rose from 21% in April 2012 to 23% in April 2014.

The real number of workers is likely to be higher as the statistics authority excluded people under 18 and workers on the youth, training, and apprenticeship rates of the minimum wage.

The living wage is currently £7.85 an hour over most of the UK and £9.15 in London, where living costs are higher.

The fall in the proportion of people being paid the living wage comes despite the Government's repeated claim that it wants to "make work pay"

Chancellor George Osborne announced in his budget that the minimum wage would be rebranded the "National Living Wage" and be increased substantially, though to a level below the real living wage.

From April 2016 the National Minimum Wage will increase to £7.20 an hour as a result.

An analysis by the Institute for Fiscal Studies however found that the minimum wage increase would come "nowhere near" to compensating in-work families for cuts to tax credits - covering only about a quarter of the income lost.

David Cameron last Sunday ruled out any changes to the tax credits cuts, telling the BBC that his plans were “right” and would leave people better off, despite the independent estimates.

Mr Cameron effectively ruled out cutting the benefit before the election, telling a voters Question time that he “rejected” proposals to cut tax credits and did not want to do so.

The tax credit cuts are part of £12bn cuts to the social security budget that the Government is to make – specifics of which it refused to announce before the election.

The minimum wage is expected to rise to £9 an hour by 2020 on current earnings projections. However, the living wage rate is likely to have risen higher by then, not least because of cuts to tax credit support.

What will change now the Welfare Reform and Work Bill has been passed?

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