What is the
Living Wage?

For KPMG, paying the Living Wage is not just an important part of our values, our people strategy and our award winning corporate responsibility agenda: it’s critical.
Guy Stallard, KPMG

What is it?

  • An hourly rate set independently and updated annually
  • The Living Wage is calculated according to the basic cost of living in the UK
  • The current UK Living Wage is £7.85 an hour
  • The current London Living Wage is £9.15 an hour
  • Employers choose to pay the Living Wage on a voluntary basis
  • The Living Wage enjoys cross party support, with public backing from the Prime Minister and the Leader of the Opposition
  • Paying the Living Wage is good for business, good for the individual and good for society
  • The Living Wage Employer Mark and Service Provider Recognition Scheme provide an ethical badge for responsible pay

What are the benefits?

Good for Business

An independent study examining the business benefits of implementing a Living Wage policy in London found that more than 80% of employers believe that the Living Wage had enhanced the quality of the work of their staff, while absenteeism had fallen by approximately 25%.

Two thirds of employers reported a significant impact on recruitment and retention within their organisation. 70% of employers felt that the Living Wage had increased consumer awareness of their organisation’s commitment to be an ethical employer.

Following the adoption of the Living Wage PwC found turnover of contractors fell from 4% to 1%. 

Good for Families

The Living Wage affords people the opportunity to provide for themselves and their families. 

75% of employees reported increases in work quality as a result of receiving the Living Wage.

50% of employees felt that the Living Wage had made them more willing to implement changes in their working practices; enabled them to require fewer concessions to effect change; and made them more likely to adopt changes more quickly.

Good for Society

The Living Wage campaign was launched in 2001 by parents in East London, who were frustrated that working two minimum wage jobs left no time for family life.

The causes of poverty are complex and in order to improve lives there should be a package of solutions across policy areas. The Living Wage can be part of the solution.

What about the 'national living wage' announced by the Chancellor in the 2015 budget?

In July 2015 the Chancellor of the Exchequer announced that the UK Government will introduce a compulsory minimum wage premium for all staff over 25 years of age, and referred to it as the ‘national living wage’.

The government rate will be introduced in April 2016. 

The government has instructed the Low Pay Commission that the minimum wage premium for over 25s  should reach 60% of median earnings by 2020. 

This would mean a rise to around £9 per hour by 2020. 

The government rate is separate to the Living Wage rate calculated by the Living Wage Foundation. 

The government rate is based on median earnings while the Living Wage Foundation rate is calculated according to the cost of living. 

You can read our response to the 2015 budget here.