One in five below 'living wage'

Using the most recent figures available the study found 25% of women and 15% of men were paid below the living wage in April last year, when the benchmark was calculated as £7.20 an hour outside London and £8.30 in the capital.

In total 4.8 million Britons, 20% of employees, were paid at a level below the rate deemed necessary for a basic standard of living, an increase from 3.4 million in 2009.

Unlike the minimum wage, it is up to employers to decide whether their staff are paid the living wage, which is currently £7.45 an hour or £8.55 in London.

The report by the Resolution Foundation think-tank found 77% of employees aged under 20 earned less than the living wage.

Two-thirds of restaurant and hotel workers (67%) were paid below the benchmark, the study found.

The report's author Matthew Whittaker, senior economist at the Resolution Foundation, said: "For most of the working population real wages have been flat or declining for many years and as a result more and more people have dipped below the level of the living wage. This means an increasing struggle to keep up with the cost of living.

"Britain has a sorry story to tell on low pay. Only a handful of our close competitors do worse and the large majority have much lower rates of low pay - sometimes half as much. The challenge for all parties is to find ways of boosting rates of pay, especially for those who earn less, without putting economic growth at risk."

A Government spokesman said: "We encourage employers to pay above the national minimum wage when they are profitable and when it's not at the expense of jobs, which is what the Low Pay Commission takes into consideration when it sets the national minimum wage.

"Despite being in tough times, this Government is doing absolutely everything it can to help people on low pay with the cost of living. That's why we're taking two million people out of tax altogether, cutting income tax for those on low incomes and freezing council tax."