Hundreds of thousands of workers are set to receive a pay rise after the Living Wage Foundation announced new voluntary wage rates of £13.45 an hour across the UK and £14.80 in London.
In contrast to the government’s statutory minimum, the real Living Wage is calculated according to the actual cost of living. The new rates represent a 6.7 percent rise nationally and 6.9 percent increase in London, giving full-time workers an annual boost of more than £2,400 outside the capital and over £5,000 within it.
Nearly 500,000 employees stand to benefit, as more than 16,000 accredited Living Wage employers across the UK commit to paying staff and contractors the new higher rates.
Big names back the movement
Among the latest organisations to sign up to the voluntary scheme are clothing retailer Uniqlo, the University of Salford and Truro City Council. They join household names such as IKEA, Everton FC and Aviva, along with half the FTSE 100 and thousands of smaller firms.
The Living Wage Foundation, which launched the campaign in 2011, says it has delivered over £4.2 billion in additional wages to low-paid workers. Accreditation also requires employers to extend the real Living Wage to third-party staff such as cleaners and security guards.
“The new rates announced today will make a massive difference to workers and their families, helping them to better cope with the costs of rent, bills, food and other essentials, and to live with stability and security,” executive director Katherine Chapman said on Wednesday.
She said that despite tough conditions for many businesses, the number of accredited employers continued to grow. “These leading employers are showing that paying the real Living Wage has a far-reaching impact on staff, businesses and society.”
‘A lifeline for our people’
Employers say the wage boost delivers benefits for recruitment, retention and morale.
Francesca Small, head of people at food manufacturer Love Joes, said the firm had seen staff turnover drop from 60 percent to 27 percent since signing up. “Low pay is the norm in our industry, so we’re proud to stand out as a company that puts its people first by paying a wage which means they can live with dignity.”
Matt Sparkes, sustainability director at law firm Linklaters, said: “We’ve paid the real Living Wage for over a decade and we still hear from our people of the pride that it brings and the difference that it makes.”
Sam, a customer account executive at textile firm Thomas Kneale & Co, said the real Living Wage and secure hours had transformed his life. “Now I’m paid a real Living Wage and have secure hours… I can go out and enjoy life with friends and family. I’m free to live on my own terms.”
Difference from the legal minimum
The real Living Wage is distinct from the government’s National Living Wage, which is the legal minimum currently set at £12.21 an hour for workers aged 21 and over. In contrast, the real Living Wage is paid to all employees aged 18 and above and is independently calculated to cover essentials like rent, energy, transport and childcare.
The Foundation says its rate reflects what families need not only to survive but to live with dignity, such as being able to afford a winter coat or set aside money for emergencies.
Alongside the wage uplift, the Foundation also promotes Living Hours and Living Pension accreditations.
More than 250 employers have now signed up to Living Hours, which guarantees staff a minimum of 16 hours per week, a month’s notice of shifts, and a contract that reflects actual hours worked. Accredited employers include Aberdeen City Council, West Brom Building Society and Aviva.
The Foundation’s newer Living Pension scheme has attracted nearly 90 employers who want to ensure staff are not left behind in retirement. It sets a benchmark pension savings level with minimum contributions from both employer and employee.
‘A clear benchmark’ for decent pay
Commenting on the announcement, UNISON general secretary Christina McAnea said the new Living Wage rate “sets a clear benchmark for the rate of pay needed to keep workers out of poverty”.
The trade union chief warned that many public sector workers remain underpaid. “Thousands of NHS staff in particular will see their pay fall even further behind the real Living Wage rate. That risks the health service losing many of those on the lowest pay bands, such as porters and cleaners, to supermarkets and others willing to match the hourly rate.”
She added: “Ministers have to recognise this… and work with unions to put it right.”
