The number of people paid less than a 'living wage' has jumped by more than 400,000 in a year to over 5.2 million, says a report for the international tax and auditing firm KPMG.

The research was based on the Office for National Statistics Annual Survey of Hours and Earnings for 2012, which included approximately 182,000 returns.

Key findings

• An estimated 5.24 million people were being paid less than the living wage in 2012, an increase of around 400,000 from an estimated 4.82 million in 2011. The proportion of employees being paid under the living wage rose from 20 per cent to 21 per cent.
• The trend has largely been driven by living costs outstripping earnings growth – median hourly wages rose by just 1.1 per cent, while the living wage rate increased by 3.5 per cent nationally and 3 per cent in London (also less than the rise in the cost of essential goods).
• The proportion of jobs paying below the living wage was highest among the younger age groups, with 72 per cent of those aged 18-21 receiving less than the living wage, compared with just 27 per cent of those aged 22-29. Women were also significantly more affected than men (27 per cent compared with 16 per cent), while part-time workers were far more likely to receive low pay than full-time workers (43 per cent compared with 12 per cent).
• Pay below the living wage was less prevalent for direct employees in the public sector (less than 10 per cent of the workforce) than it was in the private sector (27 per cent), largely due to differing job types.
• Northern Ireland had the highest proportion of workers paid less than the living wage, at 26 per cent, followed by Wales at 25 per cent. The lowest proportions were in London (17 per cent) and the south east of England (18 per cent). However, by number of people north west England, London and south east England were the three most affected areas.

Source: Markit Group Limited, Living Wage Research for KPMG: Structural Analysis of Hourly Wages and Current Trends in Household Finances – 2013 Report, KPMG
Links: Report | KPMG press release | LWF press release | Guardian report