Thousands of Londoners are set to receive a welcome pay increase as it has been announced that the city’s “real living wage” has increased by 70p an hour.
The new rate is now £13.85 per hour, up from £13.15.
The National Living Wage is set by the Government every year, as is the minimum wage. Employers are encouraged to pay the Living Wage but have to pay the minimum wage, which ranges from £6.40 to £11.44, dependent on an employee’s age.
The London Living Wage is not set by the Government but by the Living Wage Foundation and aims to give workers in the capital a fair salary considering additional expenses.
What is the London Living Wage?
The London Living Wage is an hourly rate of pay that was £13.15 and has now been increased to £13.85. The London Living Wage is calculated independently to reflect the high cost of living in the capital, and aims to give workers living in the capital "and their family enough to afford the essentials and to save".
Because the cost of living is higher in London, many campaigners believe that the living wage should reflect this and be higher than the current national minimums.
How is it determined?
The London Living Wage is based on the real living wage as a start point – this is an independently calculated hourly rate of pay based on the cost of living. The real living wage for the rest of the country is currently £12.60 an hour.
There’s a significant difference between this rate and the Government’s National Living Wage, which is now £11.44 per hour for people aged 21 and over. The rate is £8.60 per hour if you’re aged 18 to 20 and £6.40 for those under 18.
The rates are calculated annually by the Resolution Foundation and overseen by the Living Wage Commission, based on the best available evidence about living standards in London and the UK.
How does it compare with the UK Government’s real living wage?
The Government sets the living wage and this is a legal requirement for all businesses and employers to abide by.
The London Living Wage is – as yet – not a legal requirement and it is up to employers whether or not to adhere to the recommendations and pay workers the amount recommended.
The living wage is for the whole of the UK and is lower than the London living wage but campaigners, such as those from the Living Wage Foundation, said things must change as the real London Living Wage is the only UK wage rate based on the cost of living.
