The Living Wage Foundation has announced a 10.1% increase in the ‘real’ living wage for UK employees.
The new hourly rate, which takes into account the true cost of living, has risen from £9.90 to £10.90 across the UK and from £11.05 to £11.95 for employees in London.
The increase in the UK Living Wage rate is 10.1% – the largest year-on-year rise announced by the Foundation since the first Living Wage rate was launched in 2011. The London Living Wage has increased by 8.1%.
The new rates are now worth almost £3,000 more per year in the UK than the minimum wage, and almost £5,000 more in London. The voluntary Living Wage is the minimum rate paid by more than 11,000 employers across the UK.
It is different to the national living wage, which is the legal minimum hourly rate that employers must pay workers aged 23 and over and is currently £9.50 an hour.
Accredited employers are encouraged to implement the new rates as soon as possible, but by 14 May 2023 at the latest.
Research from the Cardiff Business School shows that workers at Living Wage Foundation accredited employers have benefitted from more than £338m in extra wages since the start of this year alone. Living Wage Foundation director Katherine Chapman said: “With living costs rising so rapidly, millions are facing an awful ‘heat or eat’ choice this winter- that’s why a real Living Wage is more vital than ever. Today’s new rates will provide hundreds of thousands of workers and their families with greater security and stability during these incredibly difficult times.
“We are facing unprecedented challenges with the cost-of-living crisis, but businesses continue to step up and support workers by signing up to the Living Wage in record numbers. We know that the Living Wage is good for employers as well as workers, that’s why the real Living Wage must continue to be at the heart of solutions to tackle the cost-of-living crisis.”
Charles Cotton, senior reward adviser for the CIPD, said that although the rise will be welcomed by millions of low-paid workers, it may not be enough to improve financial conditions for some in the current cost of living crisis. He said: “There is also the challenge of businesses being able to afford this increase, as they too are suffering from significant cost increases. The latest government support package for businesses should relieve some of the immediate cost pressures being endured by many employers, and we would still encourage workplaces to explore how they can help low-waged workers over this difficult period.”
He encouraged employers to consider other ways they can support employee’s financial wellbeing and standard of living, including allowing flexible working, looking at career progression, and introducing financial wellbeing benefits such as occupational sick pay or hardship loans. “The most sustainable way for employers to pay more is through improved productivity. This doesn’t mean forcing staff to work harder, but smarter. Employers should review how jobs, tasks and workplaces are designed to see where improvements can be made,” Cotton said.
Kristof van Beveren, UK general manager at Living Wage employer Getir said: “Getting our people a decent living wage is very important to Getir. It embodies Getir’s values and is essential for attracting and retaining talent. In this way, we set the bar for q-commerce, and we fully intend to continue doing so.”
The GMB Union noted that the new UK rate is higher than the 2022/23 NHS Band 1 and bottom of Band 2 rate of £10.37. However, it acknowledged that Living Wage Foundation accredited organisations, which include several NHS trusts, do not need to implement the new rate immediately. Rachel Harrison, GMB acting national secretary, said: “The fact tens of thousands of NHS workers, school staff, local government workers and care staff aren’t even paid a living wage should be badge of national shame.”
The increases take effect at a time when the pace of inflation is running at a 40-year high at just under 10%. The increase was expected to be made in 2023 but has been brought forward as an emergency measure to try to help people with the current cost of living crisis facing tens of thousands of people this winter.
Source: Personnel Today