KPMG: 22 per cent earns less than Living Wage in UK

05 November 2014 4 min. read

22% of UK employees currently are earning less than Living Wage, a number that has risen slightly from the 2013 percentage, concludes KPMG in its new report. People working in the hospitality sector are the most likely to work below Living Wage, with a staggering 90% of bar personnel earning less than the set Living Wage. The research also shows that part-time workers, women and young people are the most likely to be paid less than a Living Wage.

Big Four firm KPMG recently published its ‘Living Wage Research’, executed by Markit Economics. The report is based on official hourly earnings figures and Markit Economics’ proprietary survey information on UK household finances. The report highlights the regional and job sector distribution of hourly earnings below the Living Wage in the UK.

UK Living Wage
The UK Living Wage* is an hourly rate of pay that is set let workers lead a decent life. The rate that is set independently and updated every year is calculated according to the basic cost of living in the UK. The rate used in the report is the threshold as of October 2014, when the Living Wage was set at £8.80 per hour for London, and at £7.65 per hour for the rest of the UK.

Overview of UK Living Wage Statistics

According to the report from the consulting firm, currently 5.28 million people in the UK are earning less than the Living Wage, which is 22% of all working people. In the past three years, the percentage of people working below Living Wage has steadily risen with 1% per year from 20% in 2012 to 22% in 2014. Although this seems a modest rise, this is equates to 147,000 people. “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,” comments Mike Kelly, Head of Living Wage at KPMG.

Top 10 occupations by proportion below Living Wage

The ‘Living Wage Research’ identifies the ‘top’ occupations below Living Wage in the UK. When looking at the top 10 occupations by proportion, ‘Bar Staff’ are ranked number 1 with a staggering 90% of employees working below the Living Wage. Waiters and waitresses, with 85% of them earning less than Living Wage, are found in second place, followed by kitchen and catering assistants with 80%. It might be interesting to note that all of these professions are found in the hospitality sector.

Full time - part time jobs by number and proportion below Living Wage

In addition to identifying the ‘top’ occupations below the Living Wage in the UK, the consultants also identify the population groups that are most likely to get paid below Living Wage. The research shows that people working part-time more often work for wages below the Living Wage compared to people working full-time (43% versus ‘only’ 13%). This translates to 2.98 million part-time employees earning less than a Living Wage and 2.29 million full-time workers.

Gender jobs by proportion below Living Wage

When comparing genders, the research shows that more female workers than male are earning less than a Living Wage with percentages of 27% and 16% respectively. According to KPMG this could be caused by the greater tendency of females to be in part-time jobs. Where wages did increase, they increased with an average of 3% for men compared to 2.7% for women.

Age group jobs by proportion below Living Wage

Lastly, the report looked at the different age groups and compared them by proportion below the Living Wage. This comparison shows that the 18-21 year old category is by far the highest proportion of people earning less than a Living Wage, with 72% working for less than the 'acceptable' standard. This age group is followed by the 22-29 group, with a percentage of 28%, and the 60+ group, with 23%. According to KPMG, young people are most likely group to stay caught in the ‘working poverty’ trap, and currently 1,175,000 young employees are not earning enough to support the purchase of basic necessities.

* Employers choose to pay the Living Wage on a voluntary basis.