Economic recovery ‘could fail 21% of UK workforce’

Report from the Living Wage Commission studies the impact of low pay on the UK economy

workers being paid below the living wage, are increasingly turning to food banks, credit and in-work benefits in order to get by

Workers being paid below the living wage are increasingly turning to food banks, credit and in-work benefits to get by

Despite recent signs of economic recovery in the UK, working poverty remains a significant problem, according to a report from the Living Wage Commission.

The independent inquiry made up of leading figures from business, trade unions and civil society, have warned that economic recovery could fail one in five of the UK workforce.

For the first time, the report states, the majority of people in poverty in Britain are in paid employment as living costs continue to rise above stagnant wages.

Rising energy bills and housing costs

The Living Wage Commission cites the fact that electricity, gas and water bills have increased by 88% in the last five years, and that housing costs have tripled in the past 15 years – one-and-a-half times the amount which wages have risen.

As a result, workers being paid below the living wage, are increasingly turning to food banks, credit and in-work benefits in order to get by, which the inquiry says is counter-intuitive as it puts a larger strain on the economy.

Dr John Sentamu, the Archbishop of York and chair of the Living Wage Commission, said: “The idea of making work pay is an empty slogan to millions of people who are hard pressed and working hard but find themselves in a downward social spiral. They are often in two or three jobs just to make ends meet.”

‘Knowledge-based economy’

Meanwhile, the British Chambers of Commerce (BCC) responded to the inquiry’s calls on businesses to do “the right thing”, by saying that the majority of businesses pay or “aspire to pay” the living wage.

Director general at BCC, John Longworth said: “The problems underlying low pay will not be solved by simply driving up wages and adding cost to the economy.

“Time after time, and in country after country, outcomes show that the best way to raise pay is through better education and training, in schools, universities and the workplace. We are a knowledge-based economy, and this is where our future lies.”

However, education is unlikely to feel like an immediate solution to many young people, with a recent survey by think tank, Demos, finding that half of 18-34 year olds’ debts have increased over the past five years, compared with just 13% of people over 65.

The survey, which forms a wider study of the ‘real-life’ impact debt has in the UK, found that young people were taking out credit for negative reasons, such as unexpected expenses and being able to afford the basics.

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