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Real Living Wage Set to Increase

The Living Wage Foundation has recently increased the national minimum hourly rates by 30p to £9.30. This is great news for many workers, as the pay increase will be just in time for the Christmas holiday. Workers receiving the pay raise will have a merrier Christmas this year.

The Living Wage Foundation has also said that workers in London will also receive a raise. Their basic hourly rate will go up 20p to £10.75. Currently, the government’s national living wage is set at £8.21 for workers 25 years and older.

The difference in the charity’s living wage and the government minimum hourly pay rate will come to about £5,000 a year in London, while nationally it the increase will bring in more than £2,000 a year for everyone else.

The Living Wage Foundation—What is It?

The foundation is a charity that works with businesses and people to campaign for a fair day’s pay for everyone. The real living wage was established as a way to combat poverty and inequality that keep people from moving forward and living comfortably.

Employers can join the group and voluntarily match their workers’ pay to that established by the organization. In fact, this year the foundation has accredited 1,500 businesses, for a total of just under 6,000 businesses.

Businesses in the program then pay their own employees the “real living wage,” which is higher than the government minimum. Businesses in the London area also ensure their employees receive the London living wage determined by this organization.

The organization determines the “real living wage” based on the real costs for food, clothing, and other household expenses. The wage is called the “real living wage” because this is how much the charity has determined is the minimum amount necessary in order to make a living in the London and the rest of the UK.

The real living wage is not mandatory; however, the accredited businesses who have joined the charity agree to pay their staff the real living wage, rather than the government’s national minimum wage.

Director of the Living Wage Foundation, Katherine Chapman, has said that increasing the living wage would mean happier, healthier and more motivated workers. She’s also an advocate of living wage cities.

Widening Gap Between National Living Wage and Real Living Wage

Due to the increase in the real living wage, the gap between this and the national living wage is set to widen even more. Workers paid the real living wage will now be paid £1.09 more per hour than workers on the government’s minimum wage.

KPMG, an accountancy firm, has determined that while the number of jobs in the UK receiving lower pay has fallen, there are still 5.2 million jobs that pay less than the real living wage.

Difference Between the National Living Wage & Real Living Wage

Here’s a table that illustrates the different pay rates, including the national minimum wage, the national living wage and the real living wage.

Minimum Wage

(Set by the Government for workers under 25)

National Living Wage

(for workers over 25)

Real Living Wage

Set by the foundation for workers 18 and over

£7.70 £8.21

£9.30 (for the UK)

£10.75 (in London)

Determined and enforced by the Government

Determined and enforced by the Government

Voluntary
For ages 21 and older For ages 25 and older For ages 18 and older

Table 1: Information obtain from Living Wage Foundation

Living Wage in Politics

The increase comes at a time when political parties are competing to also raise the minimum wages. Sajid Javid, of the Tory party, said they would increase the minimum pay rate for workers over the age of 25 to £10.50 by 2024.

John McDonnell has promised to raise the minimum wage to £10 per hour as soon as possible. He felt this was in line with the rise of living costs. McDonnel went on to say this would mean that everyone over 16 would be earning more than £10.50 an hour by 2024.

However, the Living Wage Foundation is urging businesses not to wait, but to pay a real living wage to their employees now, rather than years later.

Living Wage Cities – What are They?

Katherine Chapman, director of the Living Wage Foundation, has been an advocate of living wage cities. The foundation is working to establish such cities and towns, where local employers agree to pay their employees the real living wage.

Cardiff and Salford are two cities that have agreed to use the real living wage set by the foundation. In fact, Cardiff plans to double the number of workers who receive the real living way up to 50,000, as a way to release some people from the trap of low pay. The hope is that other cities and towns will soon follow Cardiff’s example.

What Can You Do if Your Employer Doesn’t Follow the Real Living Wage?

If you’d like to find out if your company should be paying you the real living wage, first check to see if your employer is a member of the Living Wage Foundation by going here. If your employer is an accredited member of the foundation, then they should be included in the list. However, if they’re not on the list, they aren’t required to pay you the real living wage.

It can happen that an accredited company does not pay their staff the real living wage. In this case, the employer will lose their accreditation. To report an accredited company, you can call the Living Wage Foundation at 020 7043 9882.

Even so, all businesses are required to pay their employees at least the national minimum wage as determined by the government. If companies don’t pay workers at least the minimum wage, this is against the law and they could be fined up to £20,000 per worker.

If you have questions about the national minimum wage, are paid less than the minimum wage or know that someone is not receiving the minimum wage, then you can contact the Pay and Work Rights Helpline, which is operated by HMRC, at this phone number: 0800 917 2368.

Who Should Receive the Real Living Wage?

The foundation does provide some guidance on the groups of employees who should receive the real living wage from accredited businesses. Here’s a list:

  • Self-employed workers: who work for a company for more than 2 hours for 8 consecutive weeks. This also applies to contractors and workers who don’t have a fixed place of work but are part of the core workforce (for example, couriers in a delivery company or home care workers).
  • Staff outside of the UK: if a business has staff based outside of the UK they don’t have to pay these employees according to the real living wage. The foundation recommends using the international living wage guides put out by the Ethical Trading Initiative.
  • Students and young people: yes, everyone over 18 should receive the real living wage.

As you can see, the Living Wage Foundation stipulates that all staff (working more than 2 hours for 8 consecutive weeks) must be paid the real living wage if they work for an accredited business. This applies to all people 18 and over, as they all face the same living requirements.

How Can Employers Become Accredited?

Businesses can become accredited with the foundation. To do this, they must pay a fee, which will vary depending on the size of their organization. Larger businesses will pay higher fees to become accredited. The fees start at £60 a year for companies with fewer than 10 employees, and go up from there.

Next, they’ll need to fill out the online application form found on the charity’s site. After this the business will be reviewed; the accreditation process can vary, but usually takes about 10 working days. For large companies, the accreditation process can take up to 6 months.

The accreditation process includes a signed licence between the company and the foundation. Once the process is finished, the foundation will send a confirmation email welcoming the business, along with a logo and other materials to show they’re accredited by the Living Wage Foundation.

One of the main benefits of accreditation is the employer voluntarily guarantees their staff a livable wage. This is also a membership of businesses, in the community, that stand with their employees in the need for a real living wage. The more companies and individuals who become aware of and embrace the real living wage, the more employees will receive a wage they can actually live on.

Businesses have also stated that paying their staff the real living wage has:

  • Improved the business’s reputation
  • Increased motivation and retention rates among employees
  • Helps differentiates the companies from others in their industry
  • Improves relations between managers and their staff

If you’d like to find more information how to be come an accredited business, please visit the Living Wage Foundation’s website to learn more about the accreditation process, the benefits of paying a real living wage and more.

Summing It Up

Many employees will enjoy a pay raise now, just before the run up to the Christmas holidays, due to the wage increase stipulated by the Living Wage Foundation. Workers will benefit from working for a real living wage, one that allows them to more comfortably take care of their responsibilities and live more comfortably.

Businesses can benefit from becoming accredited, while ensuring their staff receives a wage that allows them to cover their living expenses more easily. Being a part of this organization can increase a company’s reputation, increasing employee motivation, productivity and much more.

The Living Wage Foundation is an advocate of all employees and can help if you have comments or questions. Reach out to the organization through their website and/or by calling them to learn more about joining this charitable movement.

Useful Links:

Living Wage: https://www.livingwage.org.uk/

National Wage: https://www.gov.uk/government/publications/national-living-wage-and-national-minimum-wage-government-response-to-the-low-pay-commissions-autumn-2018-recommendations 

 

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