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Millions struggling with in-work poverty

Around 3.1 million part-time and 2.4 million full-time workers are still earning below the real living wage

An estimated 5.5 million employees are struggling with in-work poverty, according to research from the Living Wage Foundation and KPMG.

The survey found that one in five people (21%) in the UK are still earning below the real living wage; made up of around 3.1 million part-time and 2.4 million full-time workers.

The Living Wage Foundation has today announced that the recommended UK living wage will increase by 30p to £8.75 per hour. The London living wage rate will increase by 45p to £10.20. These figures are calculated annually by the Resolution Foundation and overseen by the Living Wage Commission, based on the best available evidence on living costs in the UK as a whole and in London. It is separate from the National Living Wage, which is calculated and set by the government.

The Living Wage Foundation and KPMG research revealed a gender divide in the data. One in four (24%) women earned less than the real living wage, compared to 16% of men. This equates to 3.4 million female employees versus 2.1 million male employees.

Katherine Chapman, director of the Living Wage Foundation, said that employers need to “step up".

“[These] figures show that, while 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 the lowest incomes are really feeling the squeeze,” she said. “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.”

Andy Bagnall, director of external affairs at KPMG UK (a real living wage employer), agreed that employers need to do more. “[These] figures show that more work needs to be done if we are to eradicate in-work poverty,” he said. “It’s unfortunate that in 2017 more than five million working people in the UK 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,” he added.

TUC general secretary Frances O’Grady added that extending the living wage is vital. "Millions of people are living in poverty despite being part of working households," she said. "These new rates would make a big difference to Britain's lowest paid. And they would help families keep their heads above water.

“But more companies need to sign up. Profits in the UK are at record levels. Yet many bosses are still refusing to invest in their staff. Smart employers know the value of paying the real living wage. It reduces staff turnover and boosts productivity levels.”