Roughly 500,000 employees in the United Kingdom who are employed by companies that have committed to paying the voluntary real living wage can expect an increase in their pay to a minimum of £12 per hour. This will result in an annual salary that is £3,000 higher than the government’s mandated minimum wage.
The Living Wage Foundation announced that companies in London participating in the program will provide a higher pay of £13.15 per hour to account for the added expenses of residing in the city.
The charity responsible for determining the rate stated that the increase was necessary due to findings that showed the ongoing impact of the cost of living crisis on a significant number of low-income workers in Britain.
According to recent surveys of individuals earning below the actual living wage, 60% reported visiting a food bank within the last year and 39% frequently went without meals due to financial constraints.
Over 14,000 employers and their contractors, including Aviva, Ikea, Burberry, and Lush, now pay the real living wage, which is an increase from 11,000 employers last year.
These companies will raise the minimum hourly wage to £12 across the UK, and to £13.15 in London, with an increase of £1.10 and £1.20 respectively.
The national living wage, which is set by the government and also referred to as the minimum wage, currently provides workers over the age of 22 with £10.42 per hour.
According to Katherine Chapman, director of the Living Wage Foundation, companies that agree to pay the increased wage see the benefits of having a more driven and committed staff.
She said the scheme had given £3bn in extra wages to low-paid workers since 2011 and remains the only one in the UK “independently calculated based on what people need to live on”.
Employers who adhere to paying the actual living wage have the option to implement the increase right away or delay until the final deadline in May of next year.
In 1998, Labour introduced the minimum wage with the goal of increasing the earnings of those at the bottom of the pay scale. However, in 2005, the Living Wage Foundation was formed to address concerns that the minimum wage was not sufficient, using research from the Resolution Foundation to determine the true living costs for those with low incomes.
In 2015, the former chancellor George Osborne announced that the national living wage would be applied to the higher rate band for 25-year-olds. As a result, the other three bands for younger age groups would still be designated as national minimum wage levels. These levels currently stand at £5.28 for 16 to 17-year-olds, £7.49 for 17 to 20-year-olds, and £10.18 for 21 to 22-year-olds.
In April 2024, the government announced that the minimum wage, also known as the national living wage, will increase from £10.42 to at least £11 per hour. However, the exact amount will not be revealed until the autumn statement on November 22nd by the chancellor.
According to official data, inflation increased significantly last year, reaching a peak of 11% due to sharp increases in oil, gas, and food prices. However, it has since decreased to 6.7% as of last month. During this period, wage increases were lower than the rate of inflation for over 18 months, resulting in a decrease in their purchasing power to levels similar to those in 2008.
City workers and business executives have been the primary beneficiaries of recent pay increases, which have exceeded the consumer prices index.
A recent study conducted by the organization revealed that even though inflation has decreased, 50% of low-wage employees are experiencing a decline in their financial situation compared to last year.
The foundation reported that their analysis of wages for 3.5 million low-income employees revealed that 500,000 more women than men are paid below the actual living wage.
According to the statement, females have been disproportionately affected by the financial burden of the cost of living crisis due to their typically lower incomes.
According to the foundation, over 2 million women receive wages below the actual living wage, making up 14% of all employed women. In comparison, 1.4 million men (9%) also earn below the real living wage. Overall, 60% of jobs paying below the real living wage are occupied by women.
The government representative stated that they will follow the guidance of the Low Pay Commission, which sets the standards for the national living and minimum wages. While the commission has not finalized their suggestions for the upcoming year, they anticipate that in order to meet the government’s goal of at least two-thirds of the median hourly pay by October of next year, the rate will fall between £10.90 and £11.43.
They stated that unlike other groups, the Low Pay Commission takes into account the effects of changes to our National Living Wage on both businesses and the economy in order to find a suitable balance.