Fact Check: Do six million people earn less than the living wage?

This article by , Professor of Employment Studies, Business School  was originally published on . Read the .

I鈥檓 angry and fed up with the way in which six million people earn less than the living wage.

Jeremy Corbyn, leader of the Labour Party, on the BBC鈥檚 Andrew Marr show on April 23.

To assess this claim by Jeremy Corbyn, distinguishing various low-wage floors is important. In 2017, the Living Wage Foundation鈥檚 higher voluntary (RLW) is 拢9.75 an hour in London, 拢8.45 elsewhere, based on a calculation of living costs.

The government鈥檚 compulsory wage floor is lower and covers all employees. For employees aged 25 and over, it鈥檚 called the (NLW) and is 拢7.50 per hour. For younger employees, it鈥檚 called the National Minimum Wage, and ranges from 拢3.50 to 拢7.05.

Corbyn鈥檚 claim concerns the RLW, and the Labour Party directed The Conversation to the Office for National Statistics (ONS), which show that in 2014 an 鈥渆stimated 5.9m jobs were paid below the Living Wage鈥�.

But the underlying refers to the number of employee jobs with hourly earnings below the RLW in April 2014, so Corbyn should be referring to when making this claim. The two are not identical because some people may hold more than one job. It has been estimated that, in 2014, 5.4m people with earned less than the RLW.

More recent ONS data from estimates that the number of UK employee jobs paid below the RLW increased from 6.16m (22.8%) in 2015 to 6.22m (23.2%) in 2016. More jobs are now paid below the RLW, up from 19% in 2012. Many more part-time jobs are paid below it, compared to full-time jobs, and more women鈥檚 jobs than men鈥檚 are below the threshold.

Regarding the legal thresholds, in April 2016, when the NLW was introduced, an were paid less than the statutory minimum 鈥� 1.3% of UK employee jobs. This includes those aged between 16 and 25.

The labour market (notably outside London and the South East) is still suffering from wage stagnation after the 2008 financial crisis and subsequent economic recession and austerity, with the low-paid hit hardest. The UK has drifted further towards a low wage, low productivity, low-quality employment model, while the membership density and bargaining power of trade unions to win higher wages has weakened.

Verdict

Given ONS earnings projections, it would be more accurate for Jeremy Corbyn and others to refer to the number of employee jobs (rather than people) paid below the RLW. The latest available data indicates that 5.4m people with one job were earning less than the RLW in 2014. That said, in April 2016, 6.22m employee jobs were paid below the RLW, continuing a rising trend in recent years. So while Corbyn鈥檚 statement is somewhat misleading, it is true in essence.

Review

Chris Grover, senior lecturer in social policy, Lancaster University

I agree with the verdict, and Corbyn should have referred to six million jobs, rather than six million people. The concept of a 鈥渓iving wage鈥� is a handy device to highlight low pay. What is less clear is to what extent a person earning such a wage might expect to 鈥渓ive鈥�. This is most visible in the government鈥檚 NLW, which aims to increase the wages of older workers to . This approach relates wages to what others earn, rather than the cost of living.

The RLW is related to living costs. But it is using weighted averages for a range of families. For this and other reasons, some families, particularly those headed by lone mothers and couples with more than three children, being paid the RLW will face continuing poverty while in paid work. Even deeper poverty will be faced by such families being paid the NLW.

Publication date: 27 April 2017