Pay rise for half a million workers TODAY as National Living Wage increases above inflation
HALF a million workers are set for a pay rise thanks to a Real Living Wage boost.
Unlike the national minimum wage, employers voluntarily sign up to the scheme, which sees staff paid above the legal minimum.
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The Resolution Foundation, a left-leaning economic think tank, calculates the Real Living Wage based on rising living costsCredit: Getty
The increase, which kicks in today, has been described as a “lifeline” for low-wage workers.
It comes amid fears that inflation rose to a 21-month high of 4% in September when the government releases its latest figures today.
The UK Real Living Wage hourly rate will surge from £12.60 to £13.45 an hour – an 85p rise.
Londoners will see a pay package bump worth 95p, with hourly rates going from £13.85 an hour to £14.80.
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Both increases, worth 6.7% and 6.9%, are above the current 3.8% inflation rate.
One in seven UK workers are now employed by Real Living Wage companies, totalling more than 16,000.
They include businesses across all sorts of sectors, including Aviva, Everton FC, and Ikea.
The increase means a full-time worker on the Real Living Wage will take home £2,418 more per year than someone on the government’s minimum wage.
A Londoner on the Living Wage will earn £5,050 more than minimum wage counterparts.
The Resolution Foundation, a left-leaning economic think tank, calculates the Real Living Wage based on rising living costs.
The economists factor in the changing prices of everyday outgoings like rent, energy bills, childcare and transport.
They even consider things like warm winter coats for children, and the cost of replacing a broken boiler.
The national minimum wage, on the other hand, is legally binding – employers must sign up or face the law.
It has always been lower than the living wage and decided by the government of the day.
Employers who sign up to the Real Living Wage programme commit to paying the organisation’s official rate.
That includes staff they employ through third party contractors, often including security guards and cleaners.
The national minimum wage for those aged 21 and over is currently £12.21 across the UK.
It goes down for younger workers and is £10 for those aged 18 to 20, and £7.55 for those aged under 18 and apprentices.
Confusingly, the National Minimum Wage for people aged over 21 is sometimes referred to as the National Living Wage.
But this rate is set by the government and is entirely separate from the voluntary Real Living Wage.
Francesca Small, head of people at food manufacturer Love Joes, said: “The rise to the real Living Wage will be a lifeline for our greatest asset: our people.
“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.”
Low-wage workers have endured a bruising few years since the cost of living soared in late 2021 in the wake of the Covid-19 pandemic.
Inflation peaked at 11.1% in 2022 following Russia’s invasion of Ukraine – a 41-year high.
Britain’s inflation rate was 3.8% in August, significantly higher than the euro zone’s 2%.
The Living Wage Foundation said 2,500 UK employers signed up last year despite economic challenges.
Katherine Chapman, executive director of the Living Wage Foundation, said: “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.
“It remains a tough time for low-paid workers, with 4.5million people still earning less than the real living wage and struggling to escape the grip of in-work poverty.
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“That’s why we encourage as many employers as possible to do the right thing and commit to paying a wage that reflects the real cost of living.
She added: “These leading employers are showing that paying the real living wage has a far-reaching impact on staff, businesses and society.”
When was the minimum wage introduced?
THE first National Minimum Wage was put in place in 1998 by the Labour government.
It originally applied to workers aged 22 and over, and there was a separate rate for those aged 18-21.
A separate rate for 16-17-year-olds was introduced in 2004, and in 2010, 21-year-olds became eligible for the adult rate of the National Minimum Wage.
The rate is set by the Government each year based on recommendations by the Low Pay Commission (LPC).
