Living wage rate increases by up to 4.6%

New-pound-coin-living wage

The voluntary living wage rate for employees working in the UK has increased by 30p from £8.45 an hour to £8.75 an hour.

The London living wage rate, voluntarily paid by employers to employees who work in the capital, has also increased by 45p, from £9.75 an hour to £10.20 an hour.

These rate increases announced by The Living Wage Foundation and the mayor of London Sadiq Khan, represent a potential 3.6% pay rise for employees across the UK and a 4.6% pay rise for staff working in London. Around 150,000 employees are predicted to benefit from the pay increases.

Independently calculated and annually updated, the living wage rate of hourly pay is paid by employers on a voluntary basis and is designed to reflect the basic costs of living. The higher London living wage rate reflects the additional expense of residing and working in the capital.

The voluntary living wage is distinct from the statutory national minimum wage, which is paid to employees aged 25 and over. The national minimum wage rate is currently set at £7.50 an hour. The new living wage rates are £1.25 an hour and £2.70 an hour more that the national minimum wage for employees working in the UK and London respectively.

Currently, more than 3,600 employers across the UK have become accredited as living wage employers, including Aviva, Google, Ikea, Lush, and the National Gallery.

The increases have been announced to correlate with Living Wage Week, which is running between 5 and 11 November 2017.

Katherine Chapman, director at The Living Wage Foundation, said: “The new living wage rates will bring relief for thousands of UK [employees] being squeezed by stagnant wages and rising inflation. It’s thanks to the leadership of over 3,600 employers across the UK who are committed to paying all their staff, including cleaners and security staff, a real living wage.

“Great businesses know that, even during these tough times, not only is fair pay the right thing to do but paying the real living wage brings big benefits. Nine out of 10 accredited living wage employers report real benefits including improved retention, reputation, recruitment and staff motivation.”

Sadiq Khan, mayor of London, added: “I pledged to ensure the London living wage rises to beyond £10 and I am delighted that has been achieved. I am determined to make London a fairer and more equal city, and the news that more [than] 1,500 businesses are paying the wage is a good step towards achieving that. But we need to go further, and for many more businesses and organisations to sign up.

“Paying the London living wage is not only the action of a responsible organisation, but a successful one too. Many of the accredited employers I speak to tell me of the increased productivity and reduced staff turnover that they’ve experienced since signing up.”

Andy Bagnall, director at KPMG UK, said: “The reality is that those at the bottom of the pay scale are really feeling the squeeze due to increases in the cost of living and decline in real pay. Paying a living wage will save huge swathes of people being unable to afford the basics they need.

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“As employers, we can take active steps to address this by paying the real living wage. This also delivers real and tangible business benefits. In our own firm, it has improved staff morale and driven a rise in service standards, improved the retention of staff and increased our productivity.

“It may not be possible or practical for everyone, but all organisations need to do what they can to address the problem of low pay. Of course, change cannot happen instantly, but making an initial assessment is an important first step.”