Increase in Real Living Wage to £9.90 per hour

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What is the Real Living Wage?   

The Real Living Wage is an hourly rate of pay set independently and updated annually. This is different to the UK government’s National Living Wage. The calculation is based according to the basic cost of living in the UK. Employers choose to pay the Real Living Wage on a voluntary basis. According to the Living Wage Foundation, since 2011 the campaign has impacted over 300,000 employees and delivered over £1.6bn extra to some of the lowest paid workers in the UK.  

Unlike the Government minimum wage (‘National Living Wage’ for over 23s – £8.91 rising to £9.50 in April) the real Living Wage is the only wage rate independently calculated based on rising living costs – things like fuel, energy, rent and food. The increase in Living Wage rates this year has largely been driven by rising fuel and rent costs.

Current Real Living Wage rates are:

£9.90 per hour – UK Real Living Wage

£11.05 Per hour – London Living Wage

A full-time worker earning the new, real Living Wage would earn £1,930 a year more than a worker earning the current government minimum wage rates. 

Facts and Figures-

The Benefits to the Real Living Wage increase:

Over 300,000 Living Wage workers are set for a pay boost  

£613 million in extra wages has gone to low-paid workers since the start of lockdown, with a record number of employers signing up – over 3,000 since the pandemic began 

More than £1.6 billion in extra wages has gone to low-paid workers since the start of the Living Wage movement 20 years ago 

Over 300,000 people working for almost 9,000 real Living Wage Employers throughout the country are set for a vital pay boost as the new Living Wage rates rise to £9.90 across the UK (40p increase), and £11.05 in London (20p increase), supporting workers and families. The Living Wage rates are the only rates independently calculated based on what people need to live on. 

Low pay in the UK  

The announcement of the new rates comes as new research by the Living Wage Foundation has demonstrated the scale of low pay during the pandemic, with 17.1% of employee jobs (4.8 million jobs) still paying less than the real Living Wage. Northern Ireland had the highest proportion of jobs paying below the Living Wage (21.3% or 236,000) and the South East the lowest (12.8% or 533,000).

This year the movement for a real Living Wage celebrates its twentieth year, with new research from the Cardiff Business School showing Living Wage workers have benefitted from more than £1.6bn in extra wages during this period. One in 13 workers now work for an accredited Living Wage Employer.  

What are the benefits of paying the Living Wage?

Research by Queen Mary, University of London, showed that paying the Living Wage has big benefits for business, workers, and the Treasury.

The research is the first to provide data showing the Living Wage increases the happiness of workers; it shows:

  • Over half of employees (54%) felt more positive about their workplace once the LW was introduced and 52% felt more loyal
  • Staff leaving rates fell by 25%
  • Almost a third (32%) of workers felt it benefitted their family life by allowing them to do things like spend more time with family
  • Almost 4 in 10 (38%) workers reported financial benefits such as being able to buy   more goods and save more

In addition, companies interviewed said the reputational benefits of paying the Living Wage helped them attract new business and customers.

Employers also reported HR benefits at all levels with high calibre graduates at one employer citing paying the living wage as one of the top 3 reasons for applying as it demonstrates corporate social responsibility.

The research shows that government and workers also benefit. Paying the LW can help struggling families and improve Treasury finances at a time of economic difficulty:

Government could save almost £1bn a year because of the increase in the tax base and reduced welfare spending just from firms in London paying the Living Wage

A two-person household could get up to an extra £5000 a year

There are wage costs associated with paying the LW and the research shows that for those companies surveyed:

  • Wage cost increases due to its introduction were 6% of the contract cost. This is despite low-paid staff receiving much higher increases in their hourly rate of pay (an average of 26%)

This is because introducing the RLW leads companies to adjust their ways of working by doing things such as increasing efficiency of working practices.

Harwood HR – HR Consultants providing HR Consultancy and HR Outsourced Services.  We provide clear, cost effective HR advice. For a free consultation, please contact us on:

0117 439 0119 or info@harwood-hr.co.uk

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