Households with inadequate incomes has risen 40% in Yorkshire and the Humber

THE Joseph Rowntree Foundation is calling for more employers to pay the living wage after research showed the number of households with an inadequate income has increased by 40% over four years in Yorkshire and the Humber.

Its demand has been backed by KPMG, which has said “all organisations need to do what they can to address the problem of low pay”.

Analysis by Loughborough University’s Centre for Research in Social Policy (CRSP),  for York-based Joseph Rowntree Foundation, established a Minimum Income Standard, judged as the amount that the public think people need in order to reach a socially acceptable standard of living which changes for different types of households.

A study of household incomes found 27.1% of households in Yorskhire and the Humber were below the minimum standard in 2012/13, up from 19.5% since 2008/09:

The number of households at risk of being below 50% of the Minimum Income Standard in the region almost doubled between 2008/09 and 2012/13, from 3.8% to 7.1%:

Although the research does not produce regional breakdowns by household type, nationally families with children are now at greater risk than any other group of having an inadequate income, with almost four in ten having less than they require for a socially acceptable standard of living.

A couple with two young children have seen their weekly costs rise from £626 in 2008 to £715 in 2013 – requiring a net annual income of £37,160 – while a single person’s costs have risen from £210 to £274, requiring £14,240. (A full breakdown of the calculations and amounts are available online.)

Katie Schmuecker, policy and research manager at the Joseph Rowntree Foundation, said: “There has been a turnaround in who is suffering most as a result of the economic crisis and government measures to reduce the deficit.

“While last year’s monitoring report showed a sharp rise in young single people struggling to make ends meet, this year’s report shows a rapid widening of the gap between the incomes and costs of families with children.

“Stagnant wages, cuts to in- and out-of-work benefits and sharp rises in the cost of essential items over several years have taken their toll upon the ability of families with children to secure a decent living standard. Without action by the government and employers to address this group as part of a wider anti-poverty strategy, this trend is likely to have serious consequences for the next generation.”

The foundation wants more employers to pay the living wage where they can afford to – currently set at £7.85 per hour outside of London – and Mike Kelly, head of living wage at KPMG, also thinks that companies must do more.

He said: “This is the perfect opportunity for employers to consider whether they can join the growing list of businesses paying a Living Wage.

“It may not be possible or practical for everyone, but all organisations need to do what they can to address the problem of low pay. Of course, change cannot happen instantly, but making an initial assessment is an important first step.”

The foundation also wants the national minimum wage to be set with regard to the changing cost of living and average earnings and to see the reform of the markets for essential goods and services, which include energy, financial services and transport, to ensure those on low incomes don’t pay more than better off households for services.
 
Donald Hirsch from the University of Loughborough, co-author of the report, added: “Our tracking of what has happened to people on the lowest incomes shows just how much ground they need to make up in order to restore pre-recession living standards.

“A pause in inflation, influenced by the drop in oil prices will make it easier to reverse recent trends, but it will take several years of rising real wages, while maintaining support through tax credits and Universal Credit, to reduce decisively the number of families with inadequate incomes.”