Report finds that 21 per cent of the UK’s workforce is paid less that a Living Wage.

That is 5.24 million workers in Britain – and is an increase of 420,000, or 9 per cent over the last 12 months.

The Living Wage Commission was set up to look at the case for a Living Wage and how a significant extension of coverage could be used as a tool to tackle working poverty in Britain.

Its interim report, published recently, sets out the problems of working poverty and low pay in detail. Further reports are due throughout 2014 and are to set out possible solutions.

The reality of low pay, says the report, is that for the first time, the majority of people in poverty in the UK are working.

One in every five workers is paid less than they need to maintain a basic, but socially acceptable standard of living: five million workers are set to be left out of the economic recovery.

Working families are increasingly having to turn to food banks and credit to make ends meet.

Stagnating wages and rising living costs hit those with the lowest income hardest.

As prices rise and wages remain low, more and more low paid workers are finding it more and more difficult to get by.

This report, called ‘Working for Poverty’, finds that:

The number of people paid below a Living Wage has increased by more than 400,000 in the last 12 months; 5.24 million workers in Britain – which represents 21 per cent of the workforce – are paid below a Living Wage.

The prices of ‘every day’ items have risen faster than high priced goods;

Food costs 44 per cent more than in 2005 and energy costs have more than doubled, while vehicle costs have remained stable and the cost of audiovisual equipment has halved;

Children of parents on low pay are less likely to achieve at school compared to their peers at every stage of their childhood education;

A Living Wage employee gets nearly double the amount of family time during a typical working week as somebody on the National Minimum Wage.

The juxtaposition between increases in economic output and the worsening problem of low pay is an important one, because it means that economic growth alone will not necessarily solve Britain’s low pay crisis.

The report also found that weekly household expenditure for the poorest 10 per cent of households has risen at more than double the rate of the richest 10 per cent of households over the last 10 years – and that the UK ranks among the most unequal countries in the world.

Over the coming months the Living Wage Commission will look closely at the case for a Living Wage and at the role the Living Wage can play in tackling the UK’s low pay problem.

The interim report from the Living Wage Commission also said that economic growth alone will not necessarily solve Britain’s low pay crisis.

Remarking on the findings of the interim report from the Living Wage Commission, TUC General Secretary Frances O’Grady said: “The UK economy may be in recovery mode, but most people’s pay packets have yet to experience a similar revival.

“For those families firmly stuck in low-pay Britain, life is tough, and they continue to struggle to make their wages stretch far enough to meet the cost of food, fuel and other essentials.

“Low pay is blighting the prospects of millions of workers, and we need urgent action to tackle the UK’s serious, and worsening, low-pay problem.

“One way of easing the financial pressures on low-paid families would be for more employers to pay the living wage.

“Across the country, there are many companies and organisations which could afford to do so, yet they continue to pay their staff poverty wages.

“If the recovery is to be one experienced by everyone in the UK, ending the squeeze on incomes and boosting pay – especially for those on low incomes – is essential.

“As this report shows there are many people in Britain who very definitely need a pay rise.”

Living Wage Commissioner Professor Kate Pickett has published a paper on using the Living Wage to address health inequalities.

The paper, ‘Addressing Health Inequalities through Greater Social Equality at a Local Level: Implement a Living Wage Policy’, is one of nine proposals published by the British Academy in their collection of opinion pieces on health inequalities from leading social scientists.

In the report, Kate Pickett said that “the single best action that I believe local authorities can take to reduce health inequalities is to implement a living wage policy.

“This will have a direct impact on the UK’s income inequality, which in turn is a root cause of health inequalities and other social ills.”

She identified how implementing a ‘living wage’ policy would have a direct impact on income inequality, which in turn is a root cause of health inequalities and other social ills.

She argued that paying a living wage would help to address ‘in-work poverty’, reduce income inequality, provide an incentive to work and enhance health and wellbeing.

It also benefits employers: it may benefit work quality and productivity, reduce absenteeism and have a positive impact on staff recruitment and retention.

In her proposal she sets out:

• Why inequality matters. In the UK you can expect to live about 8 years longer if you live in the wealthiest rather than poorest areas.

More unequal societies tend to have poorer outcomes on obesity, drug dependency, mental illness and infant mortality.

They also have higher teenage births, lower child wellbeing, lower educational attainment and less social mobility.

• Evidence demonstrating that the vast majority of the population do better in more equal societies.

Runaway incomes at the top are just as damaging as inadequate incomes at the bottom.

• How the current economic climate of stagnant wages, unemployment and welfare cuts mean that the lowest paid are seeing declining incomes in both absolute and relative terms, with knock-on effects for health and social problems.

• The role of local authorities in addressing income inequalities, including the practical action being taken by Fairness Commissions across the country to investigate and implement ways of reducing inequality in their areas.

• The case for the living wage. In the UK today, work does not always provide a way out of poverty – close to two-thirds of children growing up in poverty live in a household where at least one person works.

Extending the living wage to everybody would reduce income inequality in society.

Its impact would be strongly progressive, with the largest proportional gains to the poorest 10 per cent of households.

People here would see their disposable income rise by around 7 per cent on average.

It would also reduce income inequality within workplaces, assuming no changes in top wages.

• Raising the wages of those on the very lowest incomes through paying and, importantly, encouraging others to pay, a living wage provides: a) an incentive to work; b) a way out of in-work poverty; c) improvements in work quality and productivity; d) falls in absenteeism; e) positive impacts on recruitment and retention; and f) a way of directly addressing inequalities in health and wellbeing.

You can download her report by clicking here.

Citizens UK and the Living Wage Foundation have won a Living Wage in over 500 workplaces across the country.

For, as Prime Minister David Cameron recently said to an audience at the World Economic Forum, “Where companies can afford to pay the Living Wage, I think they should.”

Seems logical really.