Although consumer confidence has reached highs not seen since before the recession took hold, experts are concerned that many households are living beyond their means. Thanks to the large number of payday loan companies on the market, consumers can now access cash with which to purchase luxuries easily – leading to a phenomenon that has been dubbed “Alice in Wongaland.”
Two thirds of restaurant and hotel staff earn less than the living wage
Now, new research shows that these concerns may be well founded, as the number of UK workers earning below the threshold judged to be a living wage has again grown. According to the Resolution Foundation think tank, this issue is now a reality for 4.8 million British employees, equating to roughly 20 per cent of the country’s workforce.
At present, the living wage is set at £8.55 in London and £7.45 for the rest of the country. However, the Resolution Foundation’s research utilised the most recent data available, when these levels were set at £8.30 and £7.20 respectively.
When the recent results were compared with data collated in 2009, there was a clear indication that this problem has continued to grow despite the end of the recession. In 2009, 3.4 million workers failed to earn the living wage.
Economist and author of the report, Matthew Whittaker, believes that the issue is especially prevalent in the UK despite the ongoing problems in the Eurozone.
He says; “For most of the working population real wages have been flat or declining for many years and as a result more and more people have dipped below the level of the living wage.
“Britain has a sorry story to tell on low pay.
“Only a handful of our close competitors do worse and the large majority have much lower rates of low pay – sometimes half as much.”
Low wages especially affect those in the restaurant and hotel business, with two thirds of all workers in these sectors earning less than the living wage. Furthermore, young people in the workplace also struggle to get by on their wages, with 77 per cent of the under-20s earning only minimum wage or slightly above.
Although, by law, employers have to pay at least the minimum wage to all members of their staff, there is at present no legislation forcing them to pay a proper living wage. This will be addressed by the government, who are believed to be considering incentives such as tax breaks for companies paying a wage level higher than the national minimum of £6.19 per hour.
In fact, the Labour party have already approached KPMG International chairman Alan Buckle to make recommendations on how the government can improve the situation for British workers in future. However, for workers still struggling to get by on poor wages, this long term fix is unlikely to be of much comfort – with food inflation on the rise and energy prices forecast to rise yet again, it has become clear that British workers need assistance now in order to contribute towards economic growth.
Do you think the national minimum wage should be raised to the level of a living wage, or would this simply create more unemployment as employers compensate for their higher labour fees?
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