UK employees on less than the Living Wage require benefits top-up
Low pay in the retail sector cost the public £11 billion a year in benefits top-ups, according to research from charity and employee representative group Citizens UK.
The charity found that 5.24 million people in the UK, 22 per cent of all employees, earn less than the Living Wage. This means the Treasury has to pay in-work benefits, such as working tax credits, to ensure employees can afford a basic standard of living even though they are working.
The research showed that major retail employers benefit more from the Treasury in wage top-ups than they are paying in tax. It highlighted Tesco’s “low pay culture” and pointed to “pay rate supplements” footed by the Treasury amounting to £364 million in the last year. Further data showed retailer Next costs the taxpayer about £2,087 for each low paid worker each year.
Supermarket giants Asda, Sainsbury’s and Morrisons were also criticised in the report for employing large numbers of people on low pay.
The charity said that huge savings could be made to the public purse if employers paid the Living Wage. “If Tesco alone made the move tax payers could save £92 million a year,” the group argued.
Reverend Karen Rooms, area dean for Nottingham South and member of the Citizens UK Council, said: “The figures revealed by this research are shocking, as the true scale of the subsidy of big business becomes clear.
“The huge profits made by some of these high street names are made off the back of poverty-wages. In some instances the amount of tax they pay doesn’t even cover the wage top-ups we all have to chip-in and help with through the Treasury.
“At a time of austerity when all sectors of society have to make savings it seems obscene that big business isn’t playing its part to help the country recover.”
In a response to the Citizen UK research, Sainsbury’s said: “Our overall reward package is highly valued by our colleagues. It incorporates pay that is well above the national minimum wage and benefits such as a discount card, annual bonus and paid breaks. Over 100,000 colleagues pay into our pensions and receive contributions from us.”
The remaining employers highlighted in the Citizens UK research had not responded at the time of publication.