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The number of people who are paid less than a "living wage" has leapt by more than 400,000 in a year to over 5.2 million, amid mounting evidence that the economic recovery is failing to help millions of working families.
A report for the international tax and auditing firm KPMG also shows that nearly three-quarters of 18-to-21-year-olds now earn below this level – a voluntary rate of pay regarded as the minimum to meet the cost of living in the UK. The KPMG findings highlight difficulties for ministers as they try to beat back Labour's claims of a "cost of living crisis".
According to the report, women are disproportionately stuck on pay below the living wage rate, currently £8.55 in London and £7.45 elsewhere. Some 27% of women are not paid the living wage, compared with 16% of men. Part-time workers are also far more likely to receive low pay than full-time workers, with 43% paid below living-wage rates compared with 12% of full-timers.
The London mayor, Boris Johnson, will tomorrow announce a new, higher rate for the living wage in the capital, while in a speech on Tuesday the Labour leader, Ed Miliband, will flesh out how his party will create economic incentives for companies to adopt the living wage.
Miliband will pledge that in the first year of a Labour government firms which sign up to the living wage will receive a tax rebate of up to £1,000 for every low-paid worker who gets a pay rise, funded by tax and national insurance revenue from the higher wages. There will be additional savings from lower tax credits and benefit payments.
A Labour spokesman said the commitment would be "a good deal for the low paid, a good deal for British business and a good deal for the taxpayer". Supporters of the living wage argue that it can save companies money by improving staff morale and performance and reducing staff turnover.
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