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An independent commission, chaired by Archbishop of York Dr John Sentamu, has encouraged employers to pay their employees the living wage where possible instead of the current minimum wage. This is due to the belief that millions of workers will not benefit from the recovery of the economy if they are not being paid enough to cover the cost of living.
At present the minimum wage is £6.31 per hour and the living wage is £7.65 per hour, or £8.80 per hour for those living in London. The living wage is calculated using the cost of living and as this cost is rising it means that more people are finding themselves unable to afford a basic, and socially acceptable, standard of living. There are currently over 5 million people in the UK being paid less than the living wage which is 21% of the workforce. This number has increased by 9%, which is 420,000 people, in the past year.
The lowest paid workers are being hit the hardest and when you look at how the cost of basics has increased this is not surprising. House prices have tripled, energy bills have doubled and the price of food has seen a 44% increase over recent years while the average wage has remained stagnant. To add insult to injury, the cost of everyday items is increasing faster than higher priced items such as cars and audiovisual equipment meaning that all items are becoming out of reach for people in low paid jobs.
Low wages are also having a negative social effect with children in low wage families seen to be less likely to achieve well in school. Also, it seems that parents in low wage families are missing out on quality family time with the average living wage worker getting twice as much time at home as a minimum wage worker. These factors show that lack of money can have an effect on aspects other than material goods and can cause a lot of stress within families.
With over half of the number of people in the UK who are living in poverty being in a family where at least one person works, their situation cannot be blamed on the fact that they are not working. They are working but are not earning enough to cover the basic cost of living. The average wage has risen by just 13% since 1999 and economic output has been rising four times faster meaning that people have to spend more without being given the means to do this comfortably.
If companies could start to see the living wage as the new minimum wage as the economy improves it will allow everyone to benefit from the recovery and not just the people who are already earning enough to support themselves and their families. Plus putting people onto a wage where they are able to spend more can only be a good thing for the economy in the long run.
By Sasha Davison
10th February 2014
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