MILLIONS of workers will not benefit from the economic recovery unless they are paid a living wage, according to a new report.

A commission chaired by Archbishop of York Dr John Sentamu warned spiralling living costs and stagnating wages were creating a "double squeeze" on the lowest paid.

The report, the first produced by the independent commission, said more than five million workers were paid less than the so-called living wage, set at £7.65 an hour (£8.80 in London), compared with the adult national minimum rate of £6.31.

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The number of workers paid below the higher rate increased by 9%, or 420,000, over the past year, it was found. Housing costs have tripled in the past 15 years while energy bills have risen by 88% in five years.

Low-paid workers are hit hardest by rising prices and stagnating wages, said the report. Dr Sentamu said: "The idea of making work pay is an empty slogan to millions of people who are hard-pressed and working hard, but find themselves in a downward social spiral.

"They are often in two or three jobs just to make ends meet. With the economy showing signs of recovery, employers that can pay a living wage must do so. They should choose between continuing to make gains on the back of poverty wages, or doing the right thing and paying a fair wage for a hard day's work."

John Longworth, director general of the British Chambers of Commerce, said: "Making ends meet is clearly an issue of huge concern to many in Britain today, and we applaud all of those businesses that pay, or aspire to pay, their staff above the living wage."