Tackling the Problem of Low Pay in Britain

NOTE: This is a guest blog post from Matthew Butcher of FairPensions.

A Living Wage is the minimum hourly wage required for housing, food and other basic needs for an individual and their family. Within London it is decided each year by the Mayor’s office and is currently £8.30. For the rest of the country, the Centre for Research in Social Policy at Loughborough University has calculated a single rate which is £7.20 per hour. The National Minimum Wage, on which 684,000 people survive, is £6.08 per hour.

The working poor make up a surprisingly, and worryingly, large proportion of the workforce in this country. According to a report by the Resolution Foundation 20% of all employees earn less than a Living Wage. Inflation, currently hovering at around 5%, is hitting Britain’s low paid millions very hard. Meanwhile companies such as Intercontinental Hotels, Capita and Barclays continue to make hundreds of millions of pounds in profit, at the very least. The wage ratios between CEO pay and average pay in Britainís biggest companies have in recent times been up to a staggering 1374:1.

Though the inequality between high and low earners certainly highlights the case for a Living Wage, it is the struggles faced by those on low pay and their families which tend to motivate campaigners. Growing up in families with low paid parents has effects on children for the rest of their lives. Of the 2.8 million children in the UK living in poverty in 2008/9, a shocking 59% of them have one or both parents in work. Children who grow up in poor households are, according to the Marmot Review, more likely to be affected by obesity, heart disease and mental health problems. Children from low income families are also less developed by the time they reach school age.

Older children, especially those at secondary school, also face great anxiety if they appear poorer than their peers. A worker for one of Britainís biggest companies who preferred not to be named said: “I feel like I’m a disappointment to my kid because I see what other parents get their kids and I can only just afford to keep us warm and fed.” Another effect of low pay on parents is that they are forced into working two or even three jobs and have less time to spend with their kids. A cleaner at Marks and Spencers, working for a contractor, described her shifts: “I work 7 days a week and like many other cleaners I have to get up at 3 o’clock in the morning to get to work from Leytonstone where I live. We can’t afford the tube and I spend 2 hours one way to get to work. My morning shift is only 4 hours.”

When Britain’s biggest listed companies fail to pay Living Wages it is taxpayers who help workers make ends meet. Low paid workers often rely on government tax credits to ‘boost’ their income. These tax credits, which are vital for workers, effectively represent a taxpayer funded subsidy to FTSE 100 companies. With increasing concern over cuts to public spending questions must be asked as to whether this subsidy for corporations represents an equitable sharing of the burden.

Paying a Living Wage is not only good for workers but also for employers.† Living wages have already been adopted by organisations all over the country, including The NHS in Scotland, KPMG in London and many universities. In the last 10 years the application of Living Wage standards has lifted 8000 people out of working poverty in London alone. Guy Stallard from KPMG Europe was very pleased to be paying his cleaners Living Wages: “We’ve found that paying the Living Wage is a smart business move as increasing wages has reduced staff turnover and absenteeism, whilst productivity and professionalism have subsequently increased.”

Taking Action

The problem of low pay in Britain is by no means a new one and the bad news is that it is getting worse. In the five years between 2004 and 2009 the number of poor children in a household with at least one worker grew by 25%. The good news is that people can now do something about it.

In May FairPensions, along with their union partners and backed by investors worth over £13 billion, launched a campaign aiming to embed Living Wages in the FTSE 100. At AGMs up and down the country board members have be asked to pay workers decent wages, and many of them have agreed to meet with us. In some companies there seems to be a genuine appetite for change while in others there is clearly a lot more work to be done.

Members of the public can add their voice to the campaign for Living Wages and take action online. FairPensions’ Living Wage action tool is pressuring finance companies to become Living Wage employers.† Anyone who has a financial product with a FTSE 100 company can take action — and that probably includes you.

Photo by andypowe11


Will Rogers
Will Rogers7 years ago

England is resting on its laurels, relying on past glories.
It is still living like as if it still has lots of colonies. It was rich because it not only had a captive market in Africa and other places, but also because it had the raw materials of those countries in its Kitty.
Exploitation, Slavery and the gun is how England attained its wealth. By the most brutal means. And now it has not got as much it fails to understand why? And so blames immigrants and any other reason except to assume responsibility for its own actions. ...like what children do. ...The previous generation spoiled this one, they were wealthy and taught their children to be arrogant and aloof, not aware that the world was changing.

Anne Khan
Anne khan7 years ago

Well . . have read all the comments, some being relevant to today some not. One of Britain's problem is that we opened our door to anyone who wanted to come here hence therefore allowing companies/workforces to lower wages and employ cheap labour whist making massive profits., and no, i don't lay the blame on these migrants, good luck to anyone who has left a country that was less than desirable thinking that Britain was the land of opportunity. We also allowed major companies to send our work to other countries because they could pay these unfortunates even lower wages with longer hours, again making massive profits for themselves, hence high unemployment here.

I can remember at the age of 17 making clothes for M&S here in the UK, now its China and Israel making our clothing, India dealing with our phone enquiries, the Far East making all our sports clothing/other cheap clothing etc etc and so the list goes on and on, our vegetables/groceries/produce coming in from all corners of the world instead of being grown/made/produced here in the UK. Mass profits are the operative words here at the expense of anyone but themselves. And who gains from all this, not the ordinary person on the street thats for sure.

We are also being controlled by a government who wouldn't know what poverty was in any shape or form being that most of them are from families/are themselves who are among the 1%'s and are either old Etonians or the equivalent , are all bedfellows with each other

Berny P.
berny p7 years ago



K s Goh
KS Goh7 years ago

Thanks for the article.

Victoria Pitchford
Vicky P7 years ago

sad that some people are making nasty remarks towards people that work and get low wages, how would you feel if you were in that position and someone insulted you?

Tom Edgar
Tom Edgar7 years ago

Having just returned from a visit to the U S A and the U K. I can only quote the American slogan. "Go to Britain for a "Rip Off" holiday.

This whole scenario in Britain puts paid to the argument that excessively high wages leads to high costs and prices. Compared to Australia and the U S A, Britain is indeed a "Rip Off" country. They are ripping off the worker by, initially, low wages and then again with high prices.

David J.
David J7 years ago

So why would someone who can't support children have them?

Claire Jordan
Claire Jordan7 years ago

No-one has to starve in the UK - even if you're homeless, there are always organisations giving away food, and plenty of it. But if you live in a cold area it's a hige struggle to afford heating, and for example my income is about £95 a week and if I want to buy a book new, rather than from a charity shop, I'll probably have to wait two or three years before I can afford it, and apart from undies and tights I almost never buy a new item of clothing - everything has to come from charity shops or eBay, and always has. Eating out - unless somebody else is paying - is something I might do once in four or five years, and I buy nearly all food from the "Reduced to Clear" shelf.

I'm doing research for a family history, but it moves very slowly in part because birth certificates etc. cost £10 each, and so I can only afford to buy about three a year. And the price of even the most basic things is rising alarmingly: a pack of six rolls of kitchen paper, for example, has gone from £1.75 to £3.65 in about three years, and a standard packet of biscuits has gone from 35p to about £1.25 in the same time.

Josephine T.
Josephine T7 years ago

Steve R. - your Jefferson quote is inaccurate as to the first sentence and unproven as to the second. Visit http://www.truthorfiction.com/rumors/j/jefferson-quotes.htm for complete information, but the short version is this: Jefferson actually wrote "To compel a man to furnish contributions of money for the propagation of opinions which he disbelieves and abhors, is sinful and tyrannical. "

Jefferson did write "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants." So who are the tyrants these days, Steve? The people who can't get jobs because there are no jobs to be had, or the 1% who keep all the money and insist on ever-increasing profits, who have bought the government lock stock and barrel, and who order the use of pepper spray against those who protest peacefully?

Thom Loveless
Thom Loveless7 years ago

'No one needs to be homeless or go hungry in the UK unless they choose that
In fact fraud is a BIG problem!'

Do you have any evidence to support that?