Living wage increased to £7.85 an hour

4 November 2014

The living wage has gone up by 20p, to £7.85 an hour, and £9.15 in London

The new rate for the voluntary wage threshold was announced at the start of Living Wage Week, along with the news that 22% of workers still do not earn the living wage – calculated as the minimum income required for a basic standard of living.

The living wage now stands at 21% higher than the National Minimum Wage of £6.50 an hour.

35,000 UK workers will be affected by the change, with over 1000 employers now accredited by the scheme, which is pushed by the Living Wage Foundation.

Rhys Moore, director of the Living Wage Foundation, said: “As the recovery continues it’s vital that the proceeds of growth are properly shared. It’s not enough to simply hope for the best. It will take concerted action by employers, government and civil society to raise the wages of the five million workers who earn less than the living wage.

“The good news is that the number of accredited living wage employers has more than doubled this year.”

“Low pay costs the taxpayer money – firms that pay the minimum wage are seeing their workers’ pay topped up through the benefits system. So it’s right that we recognise and celebrate those employers who are voluntarily signing up to the higher Living Wage, and saving the taxpayer money in the process.”

The announcement coincides with the release of research by KPMG, which found that 5.28million UK workers are being paid less than the Living Wage. Particularly culpable sectors are retail and social care.

Brent council in London has become the first council to offer incentives to employers paying the living wage. It plans to offer discounts of as much as £5000 to those signing up. Nearly 30% of jobs in Brent are low paid.

“We are committed to championing the living wage and tackling the root causes of poverty in our borough. We know that paying the living wage makes good business sense as it incentivises staff and helps to recruit and retain the best people, whilst reducing absenteeism.” said Councillor Roxanne Mashari.

The council’s cabinet will make a final decision in January, ready for introduction at the start of the tax year in April 2015.

The Institute of Employment Rights believes that income inequality must be reduced through strong trade union freedoms and collective bargaining.

To find out more about collective bargaining, the IER’s Reconstruction After the Crisis: A Manifesto for Collective Bargaining is available for purchase. A new publication, Trade Unions and Economic Inequality by Lydia Hayes and Tonia Novitz is also available.