£7.22 an hour – the price of a reasonable life in Manchester

Ten percent of the city’s wage-earners are well below that figure and a quarter only 50p above it. The situation is paralleled in other northern cities

You need to earn £7.22 an hour to have a reasonable quality of life in Manchester, according to the city’s economic and social think-tank New Economy.

In the latest of eight papers published since its foundation by Greater Manchester’s authorities in 2009, the group shows how such a ‘living wage’ is beyond the reach of the bottom ten percent of wage-earners, whose average on the figures in the report is £6.27.

Manchester is home to a population of some 2.6 million and responsible for 50% of the north west’s economic output and 5% of the national total.

The data is from 2011 but the situation is likely to have worsened since the New Year because of the continuing recession. The pinch is also sharper than the hourly figures suggest, because of reduced working times. The report calculates that the average annual wage of the bottom ten percent has fallen by 1.5 percent, or in terms of actual money, a sobering £1,317.

The £6.27 figure is only just above the 2011 minimum wage of £6.07 and well below the living wage target of £7.22. The report compares the situation with other northern cities whose bottom ten percent earn (hourly gross) on average:

Leeds £6.38
Liverpool £6.15
Newcastle £6.29
Sheffield £6.29

In London the figure is £7.19

The damage has been done since 2009 when an eight-year rise in earnings and their value was put into reverse. All the gains were wiped out by last year, leaving pay £1.2 percent lower than in 2002. The recession has hit well above the lowest ten percent level, too. The bottom quarter’s averages are:

Manchester: £7.69
Leeds: £7.82
Liverpool: £7.50
Newcastle: £7.98
Sheffield: £7.59
London: £10.12

And the bottom half’s:

Manchester: £10.74
Leeds: £10.67
Liverpool: £10.47
Newcastle: £10.71
Sheffield: £10.81
London: £15.67

The New Economy paper, Pay up? Living costs and the living wage in Manchester, argues that local intervention to help secure a living wage is necessary for Manchester’s economy to improve. It suggests six ways of encouraging increased pay, especially at the bottom end of the scale, and reducing the cost of living. They are:

Manchester’s strategic approach to improving life chances should place greater emphasis on increasing the real incomes of those low paid in work and raising the number of hours worked;

skills interventions should be delivered to ensure low paid workers progress in work and that their employers are encouraged to utilise these skills;

employers in Manchester should explore the feasibility of paying staff a living wage based on national recommendations by Living Wage Foundation;

local living cost data should be regularly published to support public and private sector decisions on paying living wages;

the supply of affordable housing should be increased to lower living costs; and

residents who are in debt should receive further support services and advice, along with improved access to fair credit.

John Holden, deputy director of research at New Economy, says:

Over the past few years, Greater Manchester has experienced a period of rising living costs and frozen wages – pay of course being a crucial factor towards achieving a decent quality of life.

Even with full-time employment at minimum-wage, many individuals will earn less than they need to achieve a reasonable living standards.

Whilst a living wage would certainly help some households, we’ve found that it is not a stand-alone solution and a much wider approach is needed in areas such as housing, transport and childcare to ensure a reduction in all basic costs.

The full paper can be downloaded here.

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