Hundreds of thousands of workers will today see a double-digit pay rise if their employer is signed up to the voluntary Real Living Wage scheme.
The Living Wage Foundation, a charity that campaigns for fair pay, said it was increasing its national real living wage to £12 an hour.
Meanwhile, workers in London will be paid £13.15 an hour.
We explain what the real living wage is, how much it will increase by and which employers are signed up to the living wage scheme.
The real living wage has increased 10% to £12 an hour for workers and to £13.15 for those in London
What is the Real Living Wage?
The real living wage, set up by the Living Wage Foundation in 2011, sets an independent wage rate based on the real cost of living.
The overall cost of living, as measured by CPI, has risen 17.4 per cent between September 2021 and September 2023, while wages have lagged by rising 13.9 per cent over the same two-year period.
In 2016, the government introduced the national living wage, inspired by the Living Wage campaign. It is based on a target to reach 66 per cent of median earnings by 2024, which under the current forecast means a rise to £10.50 an hour by 2024.
Unlike the national minimum wage – which is based on recommendations from businesses and trade unions – and the national living wage, the real living wage is based on a basket of household goods.
Companies and organisations sign up to the real living wage voluntarily and commit to paying it rather than the standard national living wage.
The Living Wage Foundation’s report says that it determines a rate that is ‘necessary to ensure that households earn enough to reach a minimum acceptable living standard as defined by the public.’
It is also affected by taxes and benefits. The freeze in tax thresholds, puts pressure on living wage rates because it lowers households’ disposable incomes, the foundation said.
With inflation still much higher than the Bank of England’s 2 per cent target, the cost of living is hitting lowest paid workers the hardest, according to the foundation.
Their recent poll of those earning below the real living wage found that 60 per cent had visited a food in the past year, and 39 per cent are regularly skipping meals for financial reasons.
Unlike the national living wage, which is eligible for over-23s, and the minimum wage, for over 21s, the real living wage is eligible to all employees aged 18 and over.
How much will it increase by?
The real living wage rate is rising from £10.90 to £12 an hour across the UK and from £11.95 to £13.15 an hour in London.
The 10 per cent rise in the rate reflects ‘persistently high costs for low paid workers’, the Living Wage foundation said.
A full-time worker earning the new rate of the real living wage would earn £3,081 a year more than someone on minimum wage, according to the foundation.
In London, a full-time worker on the new rate would earn an extra £5,323,50 a year compared to a worker on the current minimum wage.
When will the changes take place?
The Living Wage rates for 2023-34 were announced on 24 October and employers signed up to it will have six months until 1 May to implement them.
Does my company pay living wage rates?
Unlike the minimum wage or national living wage, the scheme is voluntary but thousands of employers are signed up.
The real living wage is now voluntarily paid by 14,000 UK businesses and the foundation said over 460,000 employees have received a pay rise as a result of the uplift in the rate.
The real living wage is paid by 14,000 UK businesses
It means 1 in 9 employees are now working for an accredited living wage employer.
While the foundation said record numbers of employers had joined the scheme, there are still 3.5million jobs – 12.2 per cent of employee jobs – paid less than the living wage.
Employers paying the real living wage including household names like Google, Nationwide, Ikea, Everton FC and Chelsea FC.
There are now also over 100 Living Hours employers, which provide a guaranteed minimum of 16 hours a week, a month’s notice of shift patterns and a contract that reflects hours worked.
See here for the full list of living wage employers.
