The Living Wage Foundation welcomes pay rise but urges responsible businesses to go beyond the new legal minimum on pay
We welcome the government’s new minimum wage rate for over 25s - the ‘national living wage’ of £7.20 - but we want to be clear that the job is not done on low pay.
The government’s new minimum wage rate for over 25s is not calculated according to the cost of living, unlike the higher, real Living Wage, which is currently £8.25 in the UK and £9.40 in London.
There are now 2,300 Living Wage employers already paying the Living Wage, including EDF, IKEA and Nationwide.
With a new statutory minimum wage for over 25s being introduced on 1st April 2016, the Living Wage Foundation welcomes the government’s initiative which shall see at least 1.8 million workers directly receiving a pay rise, but believes there is room for businesses that can afford to, to go further.
Katherine Chapman, Director of the Living Wage Foundation said:
Today‘s new legal minimum is an important step forward in tackling low pay in the UK – we welcome the news that millions of workers will get a pay rise. The landscape on low pay has shifted. This is down to the employers we work with who have over the past 10 years voluntarily chosen to pay beyond the minimum wage rates set by government. However the job is not done when it comes to tackling low pay. Around 6 million people earn below the real Living Wage in the UK with women, young people and part time workers most affected by low pay.
Businesses who can afford to pay a rate that reflects the real cost of living should do so and join over 2,300 employers signed up to pay our higher real Living Wage. For profitable business or those who see themselves as innovators and leaders, simply not breaking the law on pay is not enough. Many businesses want to aim higher.
The Living Wage is an hourly rate, set independently from the government and is based on the cost of living. It is currently £8.25, and £9.40 in London. There is a higher rate in London to reflect the increased costs of living in the capital.
Employers which are Living Wage Foundation accredited commit to paying all their workers these rates including third party contractors. Unlike the new government rates it applies to all workers aged over 18 and is calculated annually to ensure it covers the basic costs of living.
The ‘national living wage’ introduced today is a new minimum wage rate set at £7.20 per hour for over 25s.
Living Wage Employers Reap the Benefits of going Beyond the Minimum.
Katherine Chapman continued:
Good employers are raising wages responsibly and recognise that their employees deserve a wage they can live on and not just survive on. By voluntarily choosing to pay above the legal minimum rates, employers are demonstrating that they value their employees and are seeing significant benefits for their organisations as a result. Employers we work with have reported increases in productivity, reduced absenteeism and staff turnover alongside increased wellbeing and morale. Productivity and good pay go hand in hand.
Research shows that the public cares about whether employers pay their staff a living wage. 70% of employers found that the Living Wage had increased consumer awareness of their commitment to be an ethical employer and 70% of UK adults would consciously shop in favour of a Living Wage accredited retailer. These are statistics that employers can ill afford to ignore.
Notes to Editors:
1) The real Living Wage is calculated based on the cost of living in the UK. It takes into account a basket of goods and services, things like food, transport, housing and childcare. It is based on what members of the public think makes up an acceptable standard of living. The Living Wage rate is calculated by Loughborough University. The London rate is calculated by the Greater London Authority (GLA)
2) Statistics on the impact of the real Living Wage:
Accredited Living Wage employers: 2358. Workers having received a Living Wage pay rise: 81,818 of which full time employees are 33,804 and part time employees are 48,014
3) Statistics on those earning below the real Living Wage:
5.8 million people in the UK earn below the Living Wage - 23% of all jobs
(3.2 million Part time, 2.6 million full time)
Part time jobs are 3 times as likely to be below the Living Wage (45% versus 15%)
4) For access to Living Wage employers please contact the Living Wage Foundation press office – details below.
5) The Low Pay Commission has calculated that 1.8 million people will receive a pay rise as a direct result of the 1 April £7.20 per hour rate for those aged over 25. The Resolution Foundation has calculated that an additional 2.6m people will get a pay rise to maintain some differential in pay bands.
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You can find our briefing note on the introduction of the ‘national living wage’ here, including inforgraphics and an explanatory table.
About the Living Wage Foundation
The Living Wage is an hourly rate set independently and updated annually. The Living Wage is calculated according to the basic cost of living in the UK. Employers choose to pay the Living Wage on a voluntary basis. The Living Wage enjoys cross party support.
The London Living Wage is currently £9.40 per hour. This figure is set annually by the Greater London Authority and covers all boroughs in Greater London. The UK Living Wage for outside of London is currently £8.25 per hour. This figure is set annually by the Centre for Research in Social Policy at Loughborough University.
The Living Wage Foundation recognises and celebrates the leadership shown by Living Wage employers across the UK. There are currently over 2,000 accredited employers. We are an initiative of Citizens UK. We believe that work should be the surest way out of poverty.
What about the Government’s national living wage?
In July 2015 the Chancellor of the Exchequer announced that the UK Government will introduce a compulsory ‘national living wage’. This new government rate is a minimum wage premium rate for staff over 25 years old. It will be introduced from April 2016 and the rate will be £7.20 per hour. The 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.