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Living on less than the minimum wage

It has come to light that in the UK there are around 4.82 million people living below the basic standard of living. These people are workers who are receiving the national minimum wage for their labour and make up for one fifth of the country’s population.

The minimum wage in the UK currently stands at £6.19 but professional services company KPMG claim that for anyone to live the most basic lifestyle in our country today they have to be earning at least £8.30 in London and £7.20 in the rest of the country.

This amount is known as the living wage which is also the name of a scheme any employer can prescribe to and one that since its birth in 2001 has positively impacted on more than 10,000 workers and their families.

In terms of highlighting which industries were hit the most, the study carried out by KPMG showed that the world of hospitality is the least hospitable. 90% of bar staff are paid less than their living wage as are 85% of waiting staff. Kitchen porters and dry cleaners are also under paid as 75% of them live under the rate of the living wage and 70% of cleaners and florists also fall in to this category.

47% of all people earning under the living wage think that their financial circumstance will be even worse in a year’s time and their appetite for big purchases has seriously decreased.  

Money advice centres such as Totally Money have weighed in on the situation and Chief Executive of the firm, Will Becker explained that:

“We’re concerned too that many of those earning less than the living wage are starting to lean more heavily again on expensive forms of debt to ease short term cash-flow problems with the recent figures showing growth in overdraft borrowing compared to the better value offered by credit cards’.

“Of course most employers act in a competitive labour market and perhaps feel minimising labour costs is vital to their own survival. However, they’d do well to note that there’s a decent body of evidence that paying above market salary rates is more than compensated by increased productivity from a more loyal and motivated workforce.

“Meanwhile at a national, macroeconomic level it has long been suggested by economists that laws of supply and demand require that if wages rise, employers will naturally use less labour and jobs will be lost. But there’s a growing body of evidence here too that as minimum wages have been imposed or raised, the expected drop in employment has failed to materialise. So in sum, there’s much to ponder for individual businesses and governments about the type of company they want to build and the type of society we want to live in.

“We’re concerned too that many of those earning less than the living wage are starting to lean more heavily again on expensive forms of debt to ease short term cash-flow problems with the recent figures showing growth in overdraft borrowing compared to the better value offered by credit cards’.