More than 1.7 million denied Living Wage

MORE than 1.7 million workers will be paid below the new national Living Wage because the rate does not cover the self-employed, according to a report.

Research by the Social Market Foundation (SMF) suggested that almost 1.9 million people will not receive the wage when it increases in 2020.

The wage of £7.20 an hour will come into force on April 1 for the over-25s, rising to £9 by 2020. But the study, funded by the charity Trust for London, raised fears that companies might move away from directly employing workers towards contracting out ser vices to the self-employed.

Self -employment accounts for more than one in seven of the UK work- force, rising to almost one fifth in London.

SMF chief economist Nida Broughton said: “The Government has focused its efforts on tackling low pay, but in doing so it is further sharpening the divide between employee and self-employed. Policies such as the Living Wage make it artificially more attractive for firms to engage contractors rather than employees.”

Mubin Haq, director of policy at Trust for London, said: “There’s a common assumption that people enter self-employment because they can afford to.

“This research finds those in low-paid self-employment are 50 per cent more likely to be living in a low-income household than low-paid employees.”