The National Minimum Wage has increased from £6.50 to £6.70 as of 1st October 2015. Further information about the National Minimum Wage rates can be found here.
Rhys Moore, Director, Living Wage Foundation said:
The Living Wage Foundation welcomes a strong national minimum wage, and the rates that come into force today will bring a much needed and welcome pay rise to many. However life on the minimum wage remains very difficult. That's why we call upon responsible businesses to pay the UK Living Wage, £7.85 p/h and the London Living Wage, £9.15 p/h. These rates are calculated independently and reflect the real cost of living. The Living Wage isn't about luxuries but enabling people to do more than simply exist.
What is the Living Wage?
Employers choose to pay the Living Wage voluntarily. It is an hourly rate of pay set independently and updated annually.
It is calculated according to the cost of living in the UK. The calculation takes into account things like accommodation, travel, healthy food and little extras like birthday presents.
The Living Wage enjoys cross party support. In the UK the modern Living Wage movement began in 2001 and is led by Citizens UK and the Living Wage Foundation. The current UK Living Wage is £7.85 an hour. The current London Living Wage is £9.15 an hour.
The Living Wage is reviewed each year and the new rate is announced in November during Living Wage Week. This year the rates will be announced on Monday 2nd November.
The Living Wage Foundation awards the Living Wage Employer Mark to employers that commit to pay the Living Wage. There are now thousands of employers that are proudly displaying the Living Wage Employer Mark. Employers that have put the Living Wage in place report a range of business benefits including lower staff turnover, higher team morale and higher productivity.
Across the UK, one in five working people earns less than the Living Wage; there is still an awful lot to do.
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."¯
The National Minimum Wage (including the 'national living wage')
- The legal minimum an employee can earn in an hour. Employers break the law if they fail to pay this rate
- The 'national living wage' rate will be £7.20 an hour
- This will increase each year, with the aim of reaching 60% of the median wage across the country by 2020 (this would mean around £9 an hour but the Low Pay Commission will consider what the market can bear)
- Different rates apply depending on the age of the employee. The 'national living wage' is for over 25s only
- Set by the Low Pay Commission
- Based on an estimation of what the market can bear
- The rates are the same right across the UK
The Living Wage
- A voluntary rate that employers commit to pay in order to go above and beyond. The Living Wage Employer Mark is a sign of best practice
- The current UK Living Wage is £7.85 an hour.
- The current London Living Wage is £9.15 an hour
- This will increase in line with the cost of living with increases announced in Living Wage Week every year
- The Living Wage is the same for all employees over the age of 18
- Independently calculated and coordinated by the Living Wage Foundation
- Based on the cost of living
- There is a separate rate for London to reflect the higher cost of living in the Capital