One fifth of workers paid less than voluntary living wage, says study

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One in five working people are being paid less than the voluntary living wage, according to new estimates.

More than five million people - 22% of the workforce - are earning less than £8.25 per hour or £9.40 in London, the research by Markit for KPMG suggests.

The number of people being paid below the living wage has risen by more than one million in just four years, but the figures are similar to last year, the analysis found.

Part-time workers were more likely to earn below the voluntary living wage, with 43% receiving an hourly wage which falls short of the basic cost of living, compared with one in seven full-time employees.

Northern Ireland had the highest proportion of people earning below the voluntary living wage (27%), while the lowest was in London and the South East (19%).

The research also found that people earning less than the living wage expected worsening financial well-being in the next year.

Two thirds of those surveyed expected greater pressure on the living costs in the next year. 

Simon Collins, senior partner and UK chairman of KPMG, said the figures showed that "more needs to be done" to "eradicate in-work poverty".

"The reality is that more than five million working people in the UK are only earning enough to 'get by' and cannot enjoy the standard of life so many of us take for granted.

"Previously, many businesses worried that increased wages hit their bottom line, but there is ample evidence to suggest the opposite.

"By paying the Living Wage we have seen improved staff morale, a rise in service standards, improved retention of staff and increased productivity.

"It is clear that it may not be possible or practical for everyone, but all organisations need to do what they can to address the problem of low pay. Of course, change cannot happen instantly, but making an initial assessment is an important first step."

The voluntary living wage is calculated yearly and is based on the basic cost of living in the UK. It is set independently by the Resolution Foundation and overseen by the Living Wage Commission.

A spokeswoman for the Department for Business, Energy and Industrial Strategy (BEIS) said: "The Government is committed to building an economy that works for all and the National Living Wage is doing just that, with more than one million workers already benefiting from a pay rise.

"In a growing economy, the National Living Wage should represent an opportunity to invest in talented staff and improve productivity."