You might have seen reports this week that six million jobs pay less than the “real” living wage.
And Labour’s shadow chancellor, John McDonnell, told the BBC’s Today Programme this morning:
“The recent report last week identified six million people earning less than the real Living Wage”
FactCheck takes a look.
What is the “real” Living Wage?
The “real” Living Wage isn’t an official term.
It’s used by the Living Wage Foundation — an independent charity that recommends employers pay workers at least £8.75 an hour to help them meet “the real cost of living” (they recommend £10.20 in London).
In contrast, the official National Living Wage is set by the government and is legally binding on employers. It’s currently £7.83 an hour.
What do the figures tell us?
The six million figure comes from a data request made to the ONS by an “independent researcher” and published this month (the ONS couldn’t tell us more about who made the request, but the Living Wage Foundation confirmed to FactCheck that it wasn’t them).
The ONS stats reveal that there are 6,286,000 jobs in the UK where employees are paid less than the “real” Living Wage for their area, as defined by the Living Wage Foundation.
A quick side note: that’s over six million jobs, but it’s not necessarily that many people. The ONS points out that someone with two part-time jobs could show up twice in the records.
How many people are being underpaid?
You might hear that six million figure and think that that huge numbers of UK workers are not being paid the wage they are legally entitled to. That’s not the case.
The “real” Living Wage is a recommendation from a charity: is not legally binding.
Let’s look at how many people are being paid less than the official National Living Wage.
The ONS says that “in April 2018, there were 441,000 employees aged 16 years and over who were paid below the National Minimum Wage or National Living Wage (1.6% of employee jobs).”
But it warns that these figures shouldn’t be used as a measure of non-compliance with the minimum wage legislation because “it is not always possible to determine from the [ONS] survey data whether an individual is eligible for the minimum wage. For example, if employees receive free accommodation, employers are entitled to offset hourly rates.”
It’s also worth saying that 90,000 of those 441,000 workers were recorded as having hourly pay just 3 pence lower than the official National Living Wage. The government’s latest National Minimum Wage and National Living Wage compliance report notes that “some underpayment is in part due to differences in how weekly and hourly pay is derived from annual or monthly salary information.”
So it’s likely that the 441,000 figure overestimates the total number of people being paid less than they are legally entitled to.
FactCheck verdict
It’s been reported this week that six million UK jobs pay less than the “real” Living Wage. It’s technically correct, but we think the claim needs more context.
You might hear that six million figure and think that huge numbers of UK workers are not being paid the wage they are legally entitled to. That’s not the case.
The “real” Living Wage is the hourly rate that a charity, the Living Wage Foundation, recommends employers should pay. It is not the same as the legally-binding National Living Wage.
The best available data from the Office for National Statistics and the government (although limited) suggests that 441,000 workers are currently paid less than the official National Living Wage.
