According to the research, published by KPMG, the equivalent of 40 per cent of the childcare and related personal services workforce, for which there are 699,000 jobs, earn below the living wage.
The findings, which are based upon data from the Office for National Statistics Annual Survey of Hours and Earnings and Markit’s UK Household Finance Index survey, have been published to coincide with Living Wage Week (1-7 November 2015) an annual event during which new UK and London Living Wage rates are announced.
The living wage is a voluntary rate that is considered necessary to maintain a ‘normal standard of living’, which employers commit to paying.
This year’s rate is increasing from £9.15 to £9.40 per hour in London, and from £7.85 to £8.25 for the rest of the UK. This compares to the new National Living Wage for over 25s of £7.20 per hour, coming into force next April.
The KPMG research, conducted by financial information services Markit, also shows that for three years in a row, women are considerably more likely to be paid below the Living Wage, as are younger workers. The findings reveal that 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.
Purnima Tanuku, chief executive of National Day Nurseries Association (NDNA), said, 'The breakdown of the figures from KPMG’s Living Wage Report research shows that about 40 per cent of employees within our sector are paid below the living wage.
'These figures correlate with our own research into the impact of the National Living Wage which the Chancellor announced in his July budget'
She added, ‘It is unacceptable that the living wage remains out of reach for many dedicated and brilliant childcare practitioners, the vast majority of whom are women.
‘We know that nursery managers and owners would happily pay the living wage but their hands are tied by the meagre rates that they are paid by their local authorities for funded places for eligible two-year-olds and all three- and four-year-olds.
‘This ‘free’ childcare amounts to 15 hours per week but is soon to double, which will only serve to exacerbate the problem unless the Chancellor acts to give nurseries a fair deal in his spending review later this month'
According to a new analysis by the Resolution Foundation, the situation is set to get worse for women in their twenties, with over a third expected to earn less than the living wage next year.
It suggests that women in their twenties are 50 per cent more likely to earn less than the Living Wage next year than the workforce as a whole, and over three times more likely than men in their forties.
The analysis, published to mark Living Wage week, also claims that the number of employees earning less than the Living Wage as a whole is set to rise to a record 6.5 million in 2016 – up from five million this year.
The Resolution Foundation goes on to say that while workers aged 25 and over will see their pay increase next April as a result of the new National Living Wage (NLW), it has a separate role to the Living Wage as it is not legally enforceable and based upon the cost of living rather than labour market conditions.
According to the Foundation, with the NLW, a full-time worker on the minimum wage will get a £1,000 pay rise. However, they would earn a further £2,000 if their employer pays them the voluntary living wage.
The Resolution Foundation says that the high proportion of younger workers earning less than the living wage highlights the need for action to boost pay, including more high-quality apprenticeships, greater opportunities to progress out of low pay, and a ‘big push’ for more employers to become Living Wage accredited.
Adam Corlett, economic analyst at the Resolution Foundation, said, ‘The number of people earning less the living wage has increased rapidly in recent years, with over a third of young women set to earn less than the new rate next year.
‘While you’d expect young people to move onto higher wages as they gain experience, the fact that they are moving jobs far less frequently today compared to before the crash is a real cause for concern. This risks holding up their careers and could leave them stranded on low pay for longer.
‘More needs to be done to boost wages and pay progression for young people. Greater take-up of the voluntary living wage should play a key part in that, along with a renewed focus on better career ladders within businesses and industries. If we fail to help young people today we risk scarring their incomes for the rest of their careers.’
