Uptake of ‘real’ living wage is increasing

The uptake of the ‘real’ living wage is increasing according to latest figures from the Living Wage Foundation.

What is the ‘real’ living wage?

The rate is calculated based on what wage is actually needed to live on. UK employers can sign up to pay the rate voluntarily.

The updated rates were announced today (15th November 2021). It now stands at £9.90 (UK) and £11.05 (London).

The statutory national living wage is set at £9.50 (from 1st April 2022). The gap between the statutory and voluntary rates has been decreasing over recent years. The government’s target is to raise the statutory rate to two-thirds of median income.

Why are more employers choosing to pay?

One reason may be a response to the pandemic. Widespread calls were made by the media for traditionally low-paid workers to be recognised. One way to do this is through higher pay. This could be a positive outcome from what has been a difficult time.

Another reason may be the challenges employers are reporting with recruitment. Particularly as a result of Brexit, fewer Europeans are coming to the UK for work. Many of these workers filled those traditionally low-paid roles. Now to attract people into these roles, employers need to pay more.

What are the challenges?

Despite the increase in employers paying the voluntary rate, 4.8 million jobs in the UK still pay below that rate.

Women and part-time workers are most likely to fall in this group. According to the Living Wage Foundation, women (20.4%) are more likely to earn below this rate than men (13.9%). Also, according to the same report, part-time workers (33.2%) are more likely to earn below this rate than full-time workers (11.0%). There is likely some cross-over here, as women are also more likely to be part-time workers. This highlights the lack of quality part-time roles available.

Why should I pay this rate?

The Living Wage Foundation report a number of business benefits of paying the ‘real’ living wage.

Paying the voluntary rate improves the reputation of your business. Further, it can increase the motivation of your employees and encourage them to stay with the business. Also, it can make you stand out amongst your competitors.

And paying people enough money to live on is the right thing to do.

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