Recent research suggests that the number of those earning below living wage has gone up from 3.4 million in 2009 to 4.8 million this year. This means that currently, 20% of the employees are paid less than the minimum living wage set for their area.
The living wage set for London is £8.55, while outside the capital it drops to £7.45. But many people don’t earn that much because although the minimum wage is compulsory, employers are not legally obliged to pay as much as the living wage.
Labour advocated that the number of poorly paid people is indeed, too high, but the ministers said that they had helped solving this problem by cutting taxes on low incomes. However, the issue seems not so easy to untangle.
The left-of-center Resolution Foundation found that the percent of women and men paid below living wage has increased by 7%, respectively 4% in by 2012. It has also been discovered that 77% of the employees were in their 20’s or even younger and that two thirds of those working in hotels or restaurants received less than the living wage.
Matthew Whittaker, report author and economist commented that “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.”
He also underlined the issue of low payment in Britain, saying “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.”
Labour shadow Treasury minister Rachel Reeves explained in an interview that the above mentioned research conducted by the House of Commons suggested that more than half of the newly-created jobs since May 2010 have been in low-pay sectors. There, the median pay/hour is less than a quarter than the national median. She pointed towards the ministers when saying that the economy they preside over “seems only to offer work that is insecure, poorly paid and – in the worst cases – simply exploitative”.
In an article for “The Guardian” , shadow chancellor Ed Balls suggested that despite the recent positive growth of the quarters, the traces of the three years of flat-lining economy cannot so easily be erased.
On Wednesday, Labour will lead an opposition debate aiming towards the argument that the Government is failing to recognize the financial difficulties in which many hard working families are put.
Alan Buckle, chairman of KPMG International has been asked by the party to think of means in which the Government could work with employers in order to increase the number of people that earn a living wage. Regarding this matter, the introduction of “living wage zones” has been considered.
The Conservatives are preoccupied with this matter as well. They are considering the increase of minimum wage and also, certain tax breaks offered to companies that pay their employees above the national minimum of £6.19 per hour.
However, the government advocated that it has surpassed its predecessor in terms of helping the low-paid by raising the minimum wage at which people pay income tax to £10,000, although in 2009 Labour decided to discard the 10p tax rate.