Member Article

25% of North East employees earn less than a Living Wage

New research published by KPMG has revealed that one in four employees across the North East are paid less than the Living Wage.

The latest figure indicates that 25 per cent of all employees (238,000 people) in the region earn less than £7.85 per hour, the current Living Wage for areas outside of London and the amount experts believe individuals need to earn to cover the basic costs of living.

Employees in Hartlepool are the worst off, with 35 per cent earning below the Living Wage, while those in the Redcar & Cleveland Unitary Authority and in Middlesbrough face a similar situation, with 32 per cent and 29 per cent of employees paid less than £7.85 per hour respectively. This compares to Newcastle at 24 per cent and 23 per cent of all employees in the UK, where around 5.84 million people earn below the threshold.

Nationally, the proportion of workers earning less than the Living Wage has risen for the third year running. The data also suggests a worrying trend which sees part-time, female and young workers as the most likely to earn a wage that fails to provide a basic but decent standard of living.

The research, conducted by Markit for KPMG, shows that part-time jobs are three times as likely to pay below £7.85 per hour (or £9.15 in London) as full-time roles. Despite accounting for less than one-third of all UK jobs, there are more part-time roles paying less than the Living Wage (3.205 million) than full-time jobs (2.623 million).

For three years in a row, the research finds that women are considerably more likely to be paid below the Living Wage than men. With nearly 280,000 more women in work than last year, this year’s data shows that an estimated 29 percent of females earn less than the Living Wage, compared with 18 percent of males.

With more young people employed than last year, the analysis shows that younger workers remain the most likely group to be caught in the ‘working poverty’ trap. 72 percent of 18-21 year olds are currently earning less than the Living Wage, compared to just 17 percent of those aged 30-39. In real terms this equates to 880,000 employees of traditional university age failing to earn enough to support the purchase of basic necessities.

Mick Thompson, office senior partner, KPMG in Newcastle, said: “The past year has seen some notable achievements, with both the number of employers accredited by the Living Wage Foundation and awareness of the issue among the general public increasing.

“However, there is still a worrying proportion of people across the North East being paid below the Living Wage. With the cost of living still high and household finances being continually squeezed, many are forced to live hand to mouth. The figures released today show that there is still more to be done if we are to eradicate in-work poverty.

“For some time it was easy for businesses to hide behind the argument that increased wages hit their bottom line, but there is ample evidence to suggest the opposite – in the shape of higher retention and higher productivity. It may not be possible for every business, particularly at a time when many North East businesses face the challenge of maintaining margins in order to stay competitive, but it is certainly not impossible to explore the feasibility of paying the Living Wage and recognise the long-term benefits it brings.”

Looking to promote your product/service to SME businesses in your region? Find out how Bdaily can help →