Despite the fact that the national minimum wage has been in place since 1998, and the national living wage since 2016, both remain well below the rate of the "real living wage" and "London living wage" as set by the Living Wage Foundation.
The Living Wage Foundation's Real Living Wage
The campaign behind the real living wage began back in 2001 as Citizens UK and is now overseen by the Living Wage Foundation. The real living wage is calculated on the basis of what people need to survive, given the actual cost of living. With the national living wage, by contrast, there is simply an objective, as recommended by the Low Pay Commission, of increasing the national living wage to 66.67 per cent of median earnings by 2024. This means that the national living wage that came into force on the 1st April 2020 of £8.72 per hour, is significantly lower than the real living wage of £9.30 per hour announced by the Living Wage Foundation on the 11th November 2019. The rate for the real living wage changes in November each year, and is next due to increase in November 2020. There is also a London living wage which reflects the higher cost of living in London, which changes at the same time as the real living wage. The rate for the London living wage therefore last changed on the 11th November 2019, and is currently £10.75 per hour.
The real living wage championed by the Living Wage Foundation is of course voluntary. Nevertheless, it is supported and implemented by almost 6000 employers, including around a third of FTSE 100 companies. That means that around 210,000 workers are paid in line with the real living wage and London living wage.
In order for the national living wage to reach 66.67% of median earnings by 2024, it is estimated that it will need to rise to £10.50 by that date. That is still £0.25 below what the London living wage is now.
As a result of the campaign by the Living Wage Foundation, it is calculated that that around £1.1 billion has been paid to workers collectively over and above what they would otherwise have received as a result of the higher level of the real living wage and the London living wage since 2001.
Call For More Employers To Support Campaign
At the time that the real living wage and London living wage last increased back in November 2019, the director of the Living Wage Foundation, Katherine Chapman stated: "In this time of uncertainty today’s new Living Wage rates give a boost to hundreds of thousands of UK workers. Good businesses know that the real Living Wage means happier, healthier and more motivated workers, and that providing workers with financial security is not only the right thing to do, but has real business benefits. This year for the first-time cities and towns have announced big plans to grow the number of Living Wage Employers in their communities. We are delighted at the ambition of Cardiff and Salford to build Living Wage cities, with Cardiff planning to double the number of workers getting the real Living Wage to nearly 50,000, freeing many more families from the low pay trap. We hope to see many more towns and cities follow suit."
