The announcement of the ‘real’ living wage rate will be brought forward from November to September this year, in response to an unprecedented rise in living costs.
The Living Wage Foundation, which calculates the hourly rate employers should pay their staff based on what people need to afford as a minimum, typically announces its annual rates as part of November’s Living Wage Week. However, it has this year decided to bring forward its announcement of the 2022-23 Living Wage as soaring inflation and the war in Ukraine pushes up the price of food, fuel and other essentials.
The consumer prices index (CPI) rate of inflation reached 9% in the year to April, its highest in 40 years. The retail prices index (RPI), which many trade unions base their pay negotiations on, reached 11.1%.
There are now more than 10,000 employers under the Living Wage Foundation’s voluntary scheme, including Google, Burberry and Everton Football Club. Once the new rates are announced, employers are encouraged to pay them as soon as possible.
Cost of living and wages
Katherine Chapman, director of the Living Wage Foundation, said: “The real Living Wage is the UK’s only wage rate independently calculated to meet the cost of living and, for workers struggling to keep their heads above water as prices surge, it’s more important than ever before. That’s why, with the rate of inflation fast approaching double figures, we are bringing forward the annual announcement of the 2022-23 Living Wage rates to late September.
“Rising prices are eating away at all of us, but nobody is feeling the pinch more than the 4.8 million low paid workers across the UK. It’s never been more important that employers who can afford it protect those who will be most affected by price rises by paying a wage based on the cost of living.”
Chapman said it had been “brilliant” to see so many employers support staff with the rising cost of living in “creative and impactful” ways over the past few months.
The latest data from XpertHR shows that the median basic pay increase in the three months to the end of April 2022 was 4%, the highest recorded level since September 1992. However, this was still five percentage points behind CPI.
XpertHR’s pay and benefits editor Sheila Attwood said: “The deepening gulf between pay and inflation continues to pose financial challenges to UK employees struggling to keep up with the rising cost of living.
“Where businesses cannot afford to track wage rises with inflation, employers should consider other support and incentives. From a business perspective this will help with the recruitment and retention of top talent, but more importantly, it ensures staff will receive the support they need to get them through this challenging period.”