05 November 2018

The real living wage – the amount a person needs to earn to afford basic living costs – has increased by 25p to £9 an hour outside of London and by 35p to £10.55 in the capital.

Calculated by the Living Wage Foundation, the rate is currently a voluntary minimum paid by over 4,700 employers. The government's 'National Living Wage' – a rebranded Minimum Wage – is £1.17 lower than the amount needed to cover basic outgoings outside London. Within the capital, it falls £2.72 an hour short. People under the age of 25 get even less. Unsurprisingly, as a result of this, most benefit claimants are in work.

The rise in the living wage follows research by KPMG, published yesterday, which found that the number of jobs paying less than the cost of living had increased to 1.2 million since - over a fifth of all jobs in the UK.

Director of KPMG, Jenny Baskerville, described this figure as "a huge disappointment ... which really hammers home the magnitude of in-work poverty in the UK".

The Institute of Employment Rights recommends that the real living wage is rolled out in place of today's National Minimum Wage and National Living Wage.

Further, our experts propose that this statutory floor should be built upon by collective bargaining at both sectoral and enterprise levels.

As well as relieving pressure on the public purse by lifting millions of people out of reliance on state benefits, higher wages will stimulate consumer demand (and thus the economy), and research suggests they could help to resolve social problems.

As Living Wage Foundation Director, Tess Lanning, says: "employers that pay the real living wage enable their workers to live a life of dignity, supporting them to pay off debts and meet the pressures of rising bills".

Alison Neill, a worker at real living wage employer Heathrow Airport, described how the real living wage has changed her life.

"Before I earned the Living Wage, I was struggling to keep on top of escalating debt, which was affecting my health, and quality of life," she said.

"One year on from being lifted onto the Living Wage and I'm now on top of my finances, much happier and more motivated in my role because I'm no longer worried about being overwhelmed with debt."

These recommendations are just some of those in our latest report Rolling out the Manifesto for Labour Law - click here to read more