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UK employers paying the voluntary “real living wage” will be asked to deliver a double digit pay increase for the second year running, helping to repair living standards as inflation starts to subside.
The Living Wage Foundation, a charity that campaigns for fair pay, said on Tuesday it was increasing its national living wage rate from £10.90 to £12 an hour in 2024, following a similar increase in 2022.
Meanwhile its London rate — which reflects the higher costs of living in the capital — will rise from £11.95 to £13.15 an hour.
The change will directly benefit about 460,000 people working for 14,000 employers who are accredited by the charity. But it could benefit many more indirectly as some large companies, including supermarkets, use the living wage as a benchmark to keep their own pay rates competitive even without seeking accreditation.
“There is a competition for labour in certain parts of the labour market,” said Katherine Chapman, the foundation’s director. She added that this pressure, combined with the need to convince investors of their social credentials, had led growing numbers of listed companies and smaller businesses to sign up despite the pressures they faced from rising costs during the past two years.
The foundation sets the voluntary rate annually based on what a range of families need to get by — including rent, childcare and travel costs with other basic needs. A full-time worker on the new voluntary rate would earn £3,801 a year more than if they were paid the current UK statutory minimum, it said.
The gap between the voluntary and statutory rates has narrowed in recent years, as the government pursues a target for the wage floor to rise to two-thirds of median earnings by 2024.
Even as inflation eroded the value of average earnings last year, minimum wage workers were better protected than others, with the statutory minimum rising by almost 10 per cent to £10.42.
Chancellor Jeremy Hunt confirmed last month that the statutory hourly minimum would increase next April to at least £11. In practice, the government is likely to adopt the recommendation of the independent Low Wage Commission, which is expected to be closer to £11.20.
However, the rapid increase in the UK’s wage floor has not been enough to insulate low income households from cost of living pressures.
Nye Cominetti, senior economist at the Resolution Foundation think-tank, which helps calculate the Living Wage Foundation’s rate, said that although low wage workers’ pay had roughly kept pace with inflation, this was for many families only just enough to offset cuts in the value of housing and other benefits.
The Living Wage Foundation said 60 per cent of workers paid below the voluntary living wage had resorted to food banks over the past year.
Meanwhile, separate research released on Tuesday by the Joseph Rowntree Foundation found that 3.8mn people in the UK had suffered destitution in 2022, a rise of 61 per cent from the pre-Covid period. The charity said the number of children experiencing destitution had tripled in the five year period since 2017.
Source: Economy - ft.com
