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Cost of living outstrips wage growth as ‘poverty pay’ jumps 65% since 2010

  • 917,000 workers in the capital now paid less than London Living Wage – 65% higher than 2010
  • Average real terms income down almost £3,000 a year across London
  • Over 90% of Londoners say the cost of living has gone up in the past year

The number of Londoners being paid less than the London Living Wage has jumped 65% since 2010 when the Government came to power according to a new report from Labour’s London Assembly Economic spokesperson Dr Fiona Twycross AM. The report, The High Cost of Low Wages, also found that average real terms pay had fallen almost £3,000 over the same period despite living costs rocketing. MsTwycross said the report was a “devastating indictment of the Government’s failure to tackle low pay in the capital.”

The latest official figures from the Mayor’s Office show that in 2010, 557,000 Londoners were paid below the London Living Wage but by 2014 this figure had risen to 917,000 leaving an additional 360,000 Londoners paid less than is deemed necessary to live in the capital.

The report, comes after the Mayor’s annual survey found 92% of Londoners think the cost of living has increased in the past year. Analysis of ONS inflation figures contained in the report found that whilst wages had grown 3.5% since 2010, the capital’s living costs have rocketed with the average cost of:

  • Fuel up 26.5%, 9.8 times the faster than wages (to 2013 based on latest ONS figures)

  • Housing up 34%, 9.5 times higher than wage rises (to 2014 based on latest ONS figures)

  • Travel (Z1-6 Travelcard) up 20%, 5.6 times the faster than wages (to 2014 based on latest ONS figures)

  • Food up 13%, 4.7 times faster than wages (to 2013 based on latest ONS figures)

Over the same period, average real terms pay dropped from £700 a week in 2010 to just £646 in 2014. This amounts to an average cut in real terms income of £2,802 as a result of wages rising far slower than inflation.

Ms Twycross said that the stagnation in wages and the rise in the number of people being paid less than the London Living Wage shows the economic recovery has not been felt by many low and middle income families and called on the Government to do more to ensure Londoners were paid a wage they were able to live on. She called on the Mayor of London to draw up an anti-poverty strategy to look at steps that could be taken to reduce the increasing numbers of Londoners struggling with the cost of living.

Labour’s London Assembly Economic Spokesperson, Fiona Twycross AM, said:

“Over the past five years the rocketing cost of living in the capital has left the average Londoner almost £3,000 a year worse off in real terms. With housing, travel and living costs rising far faster than wages it’s clear that the Government’s economic policies are not working for the majority of Londoners on low and middle incomes. This report is a devastating indictment of the Government’s failure to tackle low pay in the capital.

“The Mayor likes to boast about his support for the London Living Wage, but the reality is that on his watch almost a million Londoners are being forced to live on poverty pay. With costs for rent, food, fuel and fares outstripping wage increases, at the bare minimum people should be paid enough to live on, especially in a city as expensive as London. That is why I am calling on the Mayor to draw up an anti-poverty strategy for the capital as well as taking more action to stop the stark rise in the number of Londoners earning less than the London Living Wage.”

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