- The Living Wage Foundation has increased the real living wage to £12 an hour
- Rate for workers in London to rise to £13.15 an hour
- Almost 500,000 employees will receive a pay rise across the UK
Hundreds of thousands of workers will see a double-digit pay rise if their employer signs up to the voluntary Real Living Wage scheme.
The Living Wage Foundation, a charity that campaigns for a fair wage, said it was raising its national real living wage to £12 an hour.
Meanwhile, London workers will be paid £13.15 an hour.
We explain what the real living wage is, how much it will increase and which employers are signed up to the living wage scheme.
The real living wage has increased by 10% to £12 an hour for workers and £13.15 for those in London.
What is the real living wage?
The Real Living Wage, created by the Living Wage Foundation in 2011, sets an independent wage rate based on the actual cost of living.
The overall cost of living, as measured by the CPI, rose 17.4 percent between September 2021 and September 2023, while wages lagged behind, rising 13.9 percent over the same two-year period.
In 2016, the government introduced the national living wage, inspired by the Living Wage campaign. It is based on a target of reaching 66 per cent of average earnings by 2024, which the current forecast means an increase to £10.50 per hour by 2024.
Unlike the national minimum wage – which is based on recommendations from companies and unions – and the national living wage, the actual living wage is based on a basket of household items.
Companies and organizations voluntarily adhere to the real living wage and commit to paying it instead of the standard national living wage.
The Living Wage Foundation report says it determines a rate that is “necessary to ensure that households earn enough to achieve a publicly defined minimum acceptable standard of living.”
It is also affected by taxes and benefits. Freezing tax thresholds puts pressure on living wages because it reduces household disposable income, the foundation said.
With inflation still much higher than the Bank of England’s 2 percent target, the cost of living is hitting the lowest-paid workers hardest, according to the foundation.
Its recent survey of those earning below the real living wage found that 60 per cent had visited a restaurant in the past year and 39 per cent regularly skipped meals for financial reasons.
Unlike the National Living Wage, which is eligible for those aged 23 and over, and the Minimum Wage, for those aged 21 and over, the Real Living Wage is eligible for all employees aged 18 and over.
By how much will it increase?
The real living wage is rising from £10.90 to £12 per hour across the UK and from £11.95 to £13.15 per hour in London.
The 10 percent increase in the rate reflects “persistently high costs for low-wage workers,” the Living Wage Foundation said.
According to the foundation, a full-time worker earning the new real living wage rate would earn £3,081 a year more than someone on the minimum wage.
In London, a full-time worker on the new rate would earn an extra £5,323.50 a year compared to a worker on the current minimum wage.
When will the changes occur?
The living wage rates for 2023-34 were announced on October 24 and employers who signed them will have six months until May 1 to implement them.
Does my company pay decent wages?
Unlike the minimum wage or national living wage, the scheme is voluntary but thousands of employers are signed up.
The Real Living Wage is now paid voluntarily by 14,000 UK businesses and the foundation said more than 460,000 employees have received a pay rise as a result of the rate increase.
The real living wage is paid by 14,000 UK businesses
This means 1 in 9 employees now work for an accredited living wage employer.
While the foundation said a record number of employers had signed on to the scheme, there are still 3.5 million jobs – 12.2 per cent of employee jobs – paid below the living wage.
Employers who pay the real living wage, including household names like Google, Nationwide, Ikea, Everton FC and Chelsea FC.
There are also now over 100 Living Hours employers, offering a guaranteed minimum of 16 hours a week, a month’s notice on shift patterns and a contract that reflects hours worked.
See here for the Complete List of Living Wage Employers.