The economic downturn has pushed the earnings of a further 1.4 million employees below the level of the 'living wage' since 2009, according to a new report from the Resolution Foundation think tank.

The living wage is the rate of pay deemed by the public as necessary for a basic standard of living. At the point in time covered by the report (April 2012) it was calculated to be £8.30 an hour in London and £7.20 elsewhere.

Key findings

• 4.8 million people in Britain (20 per cent of all employees) earned below the living wage in 2012 – up from 3.4 million (14 per cent) in 2009 at the height of the recession.
• One in four female employees (2.9 million or 25 per cent) earned less than the living wage in 2012 – compared with 15 per cent of male employees (1.9 million).
• Three-quarters of employees aged 20 and under (77 per cent) earned less than the living wage.
• Just 16 per cent of employees in the south east and London were paid below the living wage, compared with almost 23 per cent in Wales and more than 20 per cent in many other parts of Britain.
• Pay rates below the living wage are most common in the hotels and restaurants sector, affecting two in three employees (67 per cent). It is least common in public administration and defence (just 2 per cent).
• The report also records the numbers of those on low pay – defined as earnings below two-thirds of the median hourly rate (£11.15 in the period covered). Using this definition, 5.1 million employees (21 per cent of the total) are low paid. Because this measure is calculated relative to median pay, which has also fallen during the downturn, the numbers have remained flat over recent years.

Source: Matthew Whittaker and Alex Hurrell, Low Pay Britain 2013, Resolution Foundation
Links: Report | Resolution press release | Labour Party press release | BBC report