Employers paying the ‘real’ Living Wage to their lowest earning employees face another 10% higher wage bill after the Living Wage Foundation announced its new rates for 2023-24.
Almost half a million people working for 14,000 real Living Wage Employers will receive the cost-of-living wage boost, as the real Living Wage rates rise to £12.00 per hour outside London (up from £10.90) and £13.15 per hour in London (up from £11.95). Last year, accredited employers saw Living Wages rates increase by 10.1%.
In London, the real Living Wage rate is now 26.2% higher than the statutory national living wage (NLW), while outside the capital it is 15.2% greater. There is no separate NLW rate for London.
The NLW currently stands at £10.42 per hour for people aged 23 and over, with chancellor Jeremy Hunt confirming earlier this month that the NLW will exceed £11 from April 2024.
In March, the Low Pay Commission, which recommends the statutory minimum wage rates for the government, estimated that the 2024-25 NLW rate would need to be in the range of £10.90 to £11.43, with a central estimate of £11.16, for the government to meet its target of two-thirds of median hourly pay by October 2024.
Real Living Wage rates 2023-24
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Research by the Living Wage Foundation, which sets the voluntary rates in collaboration with the Resolution Foundation, shows that, despite inflation easing, cost-of-living pressures continue for the UK’s 3.5 million low-paid workers.
Polling of those earning below the real Living Wage found that 60% have visited a food bank in the past year and 39% regularly skipped meals for financial reasons.
Katherine Chapman, director of the Living Wage Foundation, said: “As inflation eases, we cannot forget that low-paid workers remain at the sharp end of the cost-of-living crisis. Low-paid workers continue to struggle with stubbornly high prices because they spend a larger share of their budget on food and energy. These new real Living Wage rates are a lifeline for the 460,000 workers who will get a pay rise.”
The Living Wage Foundation encourages employers to implement the new Living Wage rate for 2023-2024 as soon as possible. It asks them to communicate to their staff within one month of new rates being announced exactly when they will receive the pay rise. Unlike the NLW, the real Living Wage rates apply to everyone over 18 years old.
In the past two years, record numbers of employers have signed up to pay the real Living Wage, including to third-party contractors, with one in nine employees in the UK now working for an accredited Living Wage Employer.
There are now 14,000 Living Wage Employers, including half of FTSE 100 companies and thousands of small businesses. There are now also more than 100 Living Hours Employers, who as well as paying the Living Wage, provide a guaranteed minimum of 16 hours’ work a week, a month’s notice of shift patterns and contracts that reflect hours worked.
Around one in eight people (3.5 million jobs) are paid less than the real Living Wage. According to the Living Wage Foundation’s projections, this figure will increase to 4.3m (15.7% of jobs) in 2023.
Brett Mendell, director of Manchester-based textiles company Thomas Kneale, said: “People are our biggest asset, and paying the real Living Wage and above has significant benefit to both our colleagues and to the company.
“Our team report lower stress and reduced financial anxiety, a higher standard of living, and a lift in morale. We have also seen productivity improvements while delivering a labour turnover reduction of 60% and a staff absence decrease of 75% since we became accredited in 2015. We’re also a Living Hours accredited employer, so our team also has security of hours along with other benefits.”
Stephen Cottrell, the Archbishop of York, said: “Too many families are suffering hunger and hardship, yet there is hope. Paying the real Living Wage to meet the true cost of living is one striking example of what employers can do to help workers lead a dignified life. The Living Wage campaign goes from strength to strength, a testament to the faith and determination of people up and down the country challenging poverty in our communities.”
Kristina Maculska, who earns the real Living Wage working at the London Stadium, said: “The rate rise makes a real difference to me and my family especially when the cost of living is so high, particularly in London. The real Living Wage has a positive impact on my motivation and productivity at work. Additionally, it helps me to feel secure about tomorrow and maintain stable mental health, which is important for healthy relationships with colleagues and family.”
Unison general secretary Christina McAnea said: “This is good news for hundreds of thousands of low-paid workers whose employers do the right thing. That’s pay them a decent wage. But many more providing essential public services will miss out. These employees include care workers, who’re often on poverty pay, in a sector already struggling to fill record vacancies.
“And today’s increase means thousands of workers employed by the NHS on the lowest pay bands – like porters, cleaners, domestics and security staff – will be significantly short of the new rate. The government must follow suit and boost the minimum wage so millions are better able to weather the cost of living pressures causing such deep financial pain.”
Earlier this year, the Living Wage Foundation launched its Living Pensions scheme, a voluntary savings target for employers developed to tackle poverty in retirement. There are now 21 Living Pension Employers committed to helping workers build up a pension pot that will provide enough income to meet basic everyday needs in retirement. The scheme introduced a savings target of 12% of a worker’s annual salary, of which the employer contributes 7%.
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