As the name suggests, the real Living Wage is the amount of money an individual needs to get by in the UK. The figure is independently calculated to include all of the basics, like rent, heating, food and transport - the necessities.
There are two types of government wage rate in the UK. There’s the national minimum wage and the national living wage - but neither of these rates are calculated in relation to what employees and their families need to live, and neither is enough to comfortably survive on alone.
The Living Wage Foundation believes that this is fundamentally wrong, and that a “hard day's work deserves a fair day's pay”. The organisation campaigns to educate and encourage employers to do just that.
Katherine Chapman, director of the Living Wage Foundation, said: “In-work poverty is today’s story. New figures out yesterday show that 5.5 million people are still paid less than the real Living Wage.
“Great businesses know that, even during these tough times, not only is fair pay the
right thing to do but paying the real Living Wage brings big benefits.”
The Real Living Wage is a voluntary commitment to paying employees the money they need to live - and is set at £10.20 for London and £8.75 per hour for the rest of the UK.
London Mayor Sadiq Khan who launched the new rates on Monday said: “London is one of the most dynamic and prosperous economies in the world, but unfortunately this prosperity isn’t shared by all Londoners. In the capital today, more than two million people are struggling to make ends meet and the ethnic pay gap is shockingly and unacceptably large.
“I want to make sure that no one who goes to work every day should have to endure the indignity of poverty.”
Living Wage rates are being launched at events across the UK during the week, in Edinburgh by Nicola Sturgeon, in Cardiff by Carwyn Jones, and being welcomed by metro mayors of Greater Manchester, Liverpool City Region and Cambridgeshire and Peterborough.
3,600 employers across the UK currently pay their employees the Real Living Wage, with Heathrow Airport, Arriva Rail and The National Gallery joining established living wage accredited firms Oliver Bonas, Ikea, and Oxfam. So why is earning a living wage important?
In-work poverty is on the rise
According to the Joseph Rowntree Foundation, one in eight workers in the UK are living in poverty, while 67% of British children in poverty live in a household where someone is in work. This is known as in-work poverty, and since the economic recovery began in 2010/11, the amount of people in in-work poverty has risen by 1.1 million.
This increase in in-work poverty can be seen in the ever-steady rise in foodbank use across the UK. The Trussell Trust, a 400-strong network of foodbanks providing emergency food across the UK, found that the main reason people use them is low income.
Sam Stapley, head of operations at The Trussell Trust, says: “Foodbanks are giving food and support to more people than ever before, and recent research from the University of Oxford found that 1 in 6 households referred were in work.
“This research also found that people referred to foodbanks have on average £319 of income in the month before their referral, barely enough to survive, let alone save. We welcomed the increase of the minimum wage by the last government and support the adoption of the real living wage so everyone has enough to live sustainably. Work also must be secure enough to stop people falling into crisis.”
Low pay can impact families, communities and society in a number of ways. The cost of poverty in the UK alone is estimated at £78million - more than the amount spent on education. What’s more, the pressure of trying to make ends meet can have damaging physical and psychological effects.
Poverty has a particular impact on the quality of family life and child development, as well as on mental health, education and the economy. Alison Garnham, chief executive of Child Poverty Action Group, explains:
"There are four million children living in poverty in the UK today - more than two-thirds of them in working families. Sadly work is not a guaranteed route out of poverty. For parents, a life on low pay often means longer working hours and less time for family life.
“In the face of big problems with universal credit and the four-year freeze on working-age benefits, families need all the help they can get. Receiving the real Living Wage can really help. It can mean families get access to the basics – like nutritious daily meals, a warm home, clothes that fit, a birthday treat for children – the things that most of us take for granted."
It makes sense
The benefits of the Real Living Wage aren’t exclusive to employees though - figures show that business benefits too. Half of the employers who committed to it reported that the Living Wage had improved recruitment and retention, while 45% saw an increase in quality of applications for living wage vacancies. It’s no surprise the majority of employers paying staff a living wage also saw an improvement in their employees’ motivation.
Lush’s European pay and benefits manager Aaron Mudd explains how and why Lush chose to commit: “We believe it is our responsibility to ensure employees can afford their basic living costs and that is why a commitment to the Living Wage is the right thing to do. Over the past five years we have increased our hourly rates of pay to employees above government set minimum wages, when financially viable for the business to do so.
“There are many reasons why paying the living wage will benefit the business, including improved retention rates, attracting the best candidates to roles, and improved employee satisfaction, but ultimately we believe it is our responsibility to ensure every employee earns enough to cover the basic costs of living."
Since 2011 more than half a billion pounds (£613,000,000) in extra wages has gone to low-paid workers. Lush sales assistant Rosie Gillham explained what differentce receiving the Living Wage meant to her and her family. She said: "I have seen the effect low wages can have, leading to precarious living situations and negative impacts on mental health.
"Through working with Citizens UK, I have met people from all walks of life - one person described their life on minimum wage as 'merely existing'. No one deserves that."
She continued: "For me today the Living Wage means I don't have to sit in a freezing home, I don't have to work crazy hours to support myself , and can focus on my degree."