Latest news from Loughborough University
25 March 2010| PR 10/58
Loughborough research shows increased minimum wage still not enough to meet a minimum living standard
Increases to the National Minimum Wage just announced by the Government and the Low Pay Commission are not nearly enough to provide a minimum socially acceptable standard of living for low earners according to research conducted by Loughborough University.
Experts at Loughborough’s Centre for Research in Social Policy (CRSP) have calculated a ‘living wage’ based on what people need to be able to buy the essentials of modern life.
According to this latest research, which uses public views about what is an acceptable minimum standard of living, workers need to earn at least £7.14 an hour in order to make ends meet.
This means that a rise in the National Minimum Wage from £5.80 to £5.93 an hour, announced in the Budget and confirmed today, is still way off the mark.
The figure is based on detailed research of what level of income people require to be able to pay for physical needs like food, heating and clothes, as well as to participate in a minimum level of social activity.
Judgements about minimum needs were made by groups of members of the public to produce a Minimum Income Standard for Britain, which is published each year. This standard has now been used to calculate a living wage requirement.
The calculation was made based on each adult in the household working a 37½ hour week. The wage needed to meet the minimum living standard varies by family type, but for most households it is above £7 an hour. A wage of £7.14 is enough to cover single people, couples and families with one or two children.
This figure is calculated as a national minimum, but the researchers acknowledge that in some parts of the country, the cost of living will be different, especially places where housing is more expensive than assumed. In London, a Living Wage of £7.60 has already been calculated, on a different basis, and adopted by the Mayor and many others.
To help inform employers and campaigners outside London, the Loughborough team has produced an on-line calculator to show what a local living wage would be with different assumptions about minimum rent and council tax requirements.
Donald Hirsch, Head of Income Studies at Loughborough University’s Centre for Research in Social Policy, who made the calculations, commented:
“Employers are being asked to pay a ‘living wage’, but we need to be clear about how this is defined. Our research shows that people in Britain define a minimum living standard as being more than what is literally needed to keep people alive. A minimum standard of living today is both about having food and shelter and also about having the opportunities and choices you need in order to participate in society.
“In the past 30 years, the wages of people in worse-paid jobs have declined in comparison to overall living standards. The minimum wage was introduced at a low level, and although it has seen some growth in its value, it remains well below what someone needs for an acceptable living standard.
“This evidence needs to be taken into account by the Low Pay Commission and the Government when making future decisions about the National Minimum Wage.”
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Notes for editors:
The Minimum Income Standard
The Minimum Income Standardwas first calculated in 2008 following discussions with ordinary people (on a range of incomes) about what they felt was needed to achieve an acceptable standard of living today.
39 groups from different kinds of household (such as families with children, pensioners and single people) had detailed discussions about the necessary elements of a household budget for each family type, ranging from food and shelter to being able to celebrate a birthday or take one's child swimming.
Experts looked at these budgets to ensure that they provided an adequate diet and met basic needs like keeping a home warm.
The Minimum Income Standard for Britain is produced by the Centre for Research in Social Policy at Loughborough University, with funding from the Joseph Rowntree Foundation. Further information at www.minimumincomestandard.org
The Centre has recently published new analysis of the implications of this standard for a living wage, at www.minimumincomestandard.org/livingwage.htm
Donald Hirsch, head of Income Studies at the Centre for Research in Social Policy, can be contacted at 07766 707831
About Loughborough University
Loughborough is one of the country’s leading universities, with an international reputation for research that matters, excellence in teaching, strong links with industry, and unrivalled achievement in sport and its underpinning academic disciplines
It was awarded the coveted Sunday Times University of the Year 2008-09 title, and is consistently ranked in the top twenty of UK universities in national newspaper league tables. In the 2009 National Student Survey, Loughborough was voted one of the top five universities in the UK, and has topped the Times Higher Education league for the UK’s Best Student Experience every year since the poll's inception in 2006. In recognition of its contribution to the sector, the University has been awarded six Queen's Anniversary Prizes.
Loughborough is also the UK’s premier university for sport. It has perhaps the best integrated sports development environment in the world and is home to some of the country’s leading coaches, sports scientists and support staff. It also has the country’s largest concentration of world-class training facilities across a wide range of sports.
It is a member of the 1994 Group of 19 leading research-intensive universities. The Group was established in 1994 to promote excellence in university research and teaching. Each member undertakes diverse and high-quality research, while ensuring excellent levels of teaching and student experience.