Nearly a quarter of people in North West still trapped in working poverty, finds KPMG report
Date published: 06 November 2017
Nearly a quarter (23%) of employees in the North West are still earning below the real Living Wage, meaning that an estimated 634,000 people are struggling to get out of in-work poverty, according to a new report published by KPMG.
The research, conducted by IHS Markit for KPMG, found that the total number of people in the UK earning below the real Living Wage is down by 100,000 compared to last year, when an estimated 22% of all jobs and 5.6 million roles paid less than the real Living Wage. This is the first reduction in five years, but still leaves the total one million higher than in 2012.
The North West and the South East have the highest number of people (each with around 634,000 and 635,000 people, respectively) earning below the real Living Wage outside of London, which has around 750,000 people under the threshold.
In terms of concentration of low-earning roles, Northern Ireland has the highest proportion of jobs earning below the real Living Wage at 26%, followed by the East Midlands, Yorkshire & Humber, Wales and the West Midlands all at around 24%. The lowest proportion of employees earning less than the Living Wage is found in the South East at 17%, Scotland at 18% and London at 19%.
In the North West, around 357,000 part-time employees (45%) earn less than the real Living Wage, compared with 2.4 million full-time workers (14%). Part-time jobs are more than three times more likely to pay below to pay below £8.45 per hour than full-time roles in the region.
For five years in a row, the research finds that women are considerably more likely to be paid below the real Living Wage than men. In the North West, the proportion of women earning less than the real Living Wage was 27%, compared to just 18% for men.
Commenting on the number of people earning below the real Living Wage, Nicola Quayle, office senior partner at KPMG in Manchester, said: “Today’s figures show that more work needs to be done if we are to eradicate in-work poverty. It’s unfortunate that in 2017 more than 634,000 working people in the North West are earning below the real Living Wage and cannot enjoy the standard of life so many of us take for granted.
“In the past, many businesses were worried that increased wages would hit their bottom line, but there is ample evidence to suggest otherwise. By paying the real Living Wage since 2006 KPMG has seen improved staff morale, a rise in service standards, improved retention of staff and increased productivity. More importantly, it has been an enabler for social mobility.
“It is clear that it may not be possible or practical for everyone, but businesses 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.”
Katherine Chapman, Living Wage Foundation Director said: “Today’s figures show that, whilst moving in the right direction, there are still 5.5 million people earning less than the real Living Wage across the UK and with the cost of living increasing as inflation rises, those on lowest incomes are really feeling the squeeze. The new Living Wage rates will be announced tomorrow and with tough times ahead it’s more important than ever that great employers are stepping up to ensure that their staff earn a wage that ensures workers can live with dignity.”
Household finances survey
The analysis also explored household finances of both those earning below the Living Wage and those earning the Living Wage and above. It revealed that even though the number of people earning below the real Living Wage has slightly decreased, around four times as many respondents earning less than the real Living Wage indicated that their household finances had worsened (27%) as those that experienced an improvement (7%) in October 2017.
It also found:
- A sharp increase in the cost of living for those earning below the Living Wage, with around 59% of those earning below the threshold reporting an increase, compared to only 3% that signalled a decline.
- Nearly twice as many (17%) of those earning below the Living Wage noted a decline in pay compared to those that recorded an increase (9%). This contrasted with the picture seen for employees earning above the Living Wage, who registered an upturn in pay (as has been the case since 2013).
- At the same time, people earning less than the Living Wage recorded a steeper fall in job security compared to a year ago. More than one in five (21%) of employees earning below the threshold signalled a drop in job security, compared with just 8 percent that noted an improvement.
Looking ahead, UK households believe that the cost of living will continue to rise markedly over the coming year. Notably, expectations for living costs over the next 12 months were at a four-year high for both those earnings above and below the Living Wage in October 2017. Nearly four out of five (78%) employees earning less than the Living Wage forecast a further hike in living costs over the next year, while just 2% anticipate a fall.
Nicola Quayle concluded: “Even though the number of people earning below the real Living Wage has slightly decreased, the reality is that those at the bottom of the pay scale are really feeling the squeeze due to increases in the cost of living and decline in pay. Looking ahead, a rise in inflation levels will further eat into the pay-packets of those already struggling – it’s time for the business community to play its part to help those working earn a respectable wage."
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