Fifth of Scots earning less than Living Wage - KPMG

The latest figures from 2014, indicate one in five employees in Scotland earn less than the Living Wage – an increase of one percent from last year of 19 per cent).

This means 27,000 more people in one year are earning below the threshold. During the same period, the total number of jobs in Scotland grew by 40,000 to just over 2.2 million.

In contrast to other regions in the UK, however, Scotland has one of the lowest proportion of employees paid below the Living Wage, second only to the South East (21 per cent) and joint with London (20 per cent). Compared to the UK average (23 per cent), there are three percent fewer Scots being paid below the Living Wage.

Similarly, Scotland fares better than the UK in terms of the median wage per hour: £11.76 versus £11.61 for the UK as a whole. Since the same research was published a year ago, the Scottish figure has moved from being just below the UK average to 1.3 per cent above.

While the median wage per hour across the UK as a whole rose by only 0.2 per cent, Scotland has seen faster growth - up 1.5 per cent.

Nevertheless, the proportion of workers earning less than the Living Wage has risen for the second year running in Scotland.

The new data also underlines a worrying UK 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 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 across the UK than last year, this year’s data shows that an estimated 29% of females earn less than the Living Wage, compared with 18% of males.

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

Jenny Stewart, head of infrastructure and government and spokesperson for living wage at KPMG in Scotland, said: “It is disappointing to see an increase in the number of people being paid below the Living Wage.

With the cost of living still high, the squeeze on household finances remains acute. The reality for many is very difficult. The figures released show that there is still more to be done if we are to eradicate in-work poverty.

However, the past year has seen some notable achievements, with an increase from 60 accredited Living Wage employers in Scotland in 2014 to more than 370 today. This increase will no doubt be reflected in future published figures.

“Awareness of the Living Wage issue has also increased - more than three out of four of the general public know about the Living Wage.

“There is now a clear and substantial body of evidence persuading employers of to support the business case for the Living Wage. Higher levels of staff retention and higher productivity can offset any additional costs to the business. Although it may not be possible for every business, it is certainly not impossible to explore the feasibility of paying the Living Wage.”

This year’s research also revealed that, during October 2015, four times as many people earning less than the Living Wage were downbeat about their household finances than were positive, even more so than they were in October 2014. The finger pointed towards worries about the rise in debt levels and pessimism regarding job security. By contrast, around 30% of people earning above the Living Wage anticipate an improvement in their household finances during the next 12 months.

Peter Kelly, director of the Poverty Alliance which runs the Scottish Living Wage Accreditation Initiative, said: “This research reminds us why the efforts to have more employers pay the Living Wage in Scotland is so important. With one in five Scottish workers paid less than the Living Wage it is clear that we need to do far more to convince employers of the benefits of the Living Wage.

“As we have seen over the last year, more and more employers are convinced of the need for a Living Wage and have been receiving the credit for paying it. As the economy starts to grow again and more jobs are created, it is critical that we ensure that we are not creating low paid jobs. We know that an economy based on low paid work is not sustainable, the Living Wage gives us an alternative approach for an economy based on fairness.”