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Unfinished Business: The Quest for a Living Wage contains case studies of successful living wage campaigns including Manchester, Oxford and Glasgow, and includes a toolkit for unions, faith groups and community organisations to boost current and future living wage campaigns.
The report shows that the UK labour market is defined by a high proportion of poorly paid, insecure, low status jobs. Approximately 5.3 million people - more than a fifth of all employees in Britain - fall below the low pay threshold, which is one of the highest rates in Europe. As a result the economy suffers from significant levels of wage inequality and people having to work long hours to meet their basic needs.
Unfinished Business: The Quest for a Living Wage finds that low pay has a real impact on communities. Nearly 60 per cent of the three million children living in poverty live in households where at least one person is in paid employment, and poor children do less well in school, have reduced life chances and are more likely to be physically or mentally ill.
The report finds that since 1997, the poorest 10 per cent of households have seen their weekly incomes fall by £9 a week. As real wages have fallen, the gap between what people earn and what they need has increasingly been filled by debt. The amount owed by UK households has tripled in the last decade.
However, while some bosses are using the current economic situation as a smokescreen to freeze the wages of low-paid workers, a growing number of public and private sector employers are recognising that job cuts and low pay will further deepen the recession by taking demand out of the economy, says the report.
TUC Deputy General Secretary Frances O'Grady said: 'The living wage campaign has made enormous strides since 2001, taking thousands of families out of poverty and helping to boost fragile local economies in cities that have adopted living wage policies.
'Government Ministers, public authorities, businesses and the City have seen the moral and practical benefits of paying a living wage. This is not a luxury in a time of economic downturn, but the key to building a fair, equitable and sustainable recovery.'
Journalist and writer Polly Toynbee said: 'I welcome this report. A living wage matters now more than ever: it raises family incomes, it saves the state on tax credits and it lifts the status of undervalued work.'
Chair of the FPN Karen Buck MP said: 'Work may be the surest route out of poverty but it is a far from certain one. As an inner-city MP I see all too often how low pay leaves individuals unable to provide for their families and households through their wages alone. Living Wage initiatives are a means of tackling working poverty by making sure work pays and galvanising local economies.
'Rather than retreat in the face of recession and austerity, members of Parliament should be remaking, restating and amplifying the case for living wage initiatives across the country, both in the private and public sector, as a route towards a fairer and more socially just society.'
Director of the FPN Mark Donne said: 'It is clearly in the interests of low paid employees, large scale employers and the wider community to implement living wage policies. This report also shows that the outstanding campaigning work conducted in London by the broad-based community coalition London Citizens, is a model that can work in communities right across the UK. Trade unions wield a much stronger influence when they work alongside civil society organisations.'
Jon Cruddas MP said: 'One of the central challenges for the leaders of the coalition Government, and for that matter the new leader of the Labour Party, is to protect the most vulnerable in our labour market.
'The living wage is an intrinsic part of that. This report proves that local and national government and major employers are on notice that the drive for living wage justice in London has spread and is building throughout Britain. It is time for all without excuse to support these vital initiatives.'
Green party politician and living wage campaigner Caroline Lucas MPsaid: 'The introduction of a living wage is an essential part of addressing widening inequality in this country. It brings wider social benefits, tackles poverty, makes work pay, and improves the quality of lives for families. We need local governments and businesses to implement the living wage for all their workers and contractors. We need to ensure that all people in Britain are paid properly.'
Head of Facilities Management at KPMG Europe Guy Stallard said: 'KPMG remains committed to being a responsible business. Paying the living wage is an important part of this and supports the firm's position as being one of the best employers in the UK.
'We have found that paying the living wage has benefits on both sides, as increasing wages has reduced staff turnover and absenteeism, whilst productivity and professionalism has subsequently increased.'
NUS Vice-President for Welfare Ben Whittaker said: 'It is very hard for anyone looking for a job at the moment and many people, particularly graduates and other young people, are being asked to work for low pay in order to get experience in their chosen field. It is vital that employers pay a living wage to all their employees so that everyone can earn enough money to pay for essential goods and services.'