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Rise in UK Living Wage Good News for Low Paid Workers

Rise in UK Living Wage Good News for Low Paid Workers

Published: 8 November 2014

A rise in the "living wage" rate has been announced this week meaning more than 30,000 low paid workers will receive a pay rise worth up to £400 a year.

The UK Living Wage Scheme

There is no obligation on employers to pay the UK Living Wage. It is essentially a voluntary, accredited scheme intended to improve the lot of low paid workers. The rate is set independently each year, based on the basic cost of living.

Rate increases

The UK Living Wage rate has been increased in London by 25p to £8.80 an hour.

In the rest of Britain it has been increased by 20p to £7.65 an hour.

This living wage rate is substantially more than the current national minimum wage of £6.31.

Increased uptake on scheme and benefits for employers

There has been a 450 per cent increase in the last year in employers signing up to the UK Living Wage scheme. Campaigners have championed it as not only morally right, but also an effective business tool with commercial benefits. It is presented as a way of encouraging staff loyalty and retention. By reducing staff turnover it is argued this also has the effect of reducing cost and increasing productivity.

Firms signed up to the voluntary scheme include Barclays, Lloyds, Aviva and Oxfam. Despite this, some major retailers are reluctant to sign up.

In a speech to the CBI this week, Labour leader Ed Milliband proposed offering a tax break worth £1000 per employee for employers signing up to the UK Living Wage Scheme.

Mayor of London Boris Johnson has also applied pressure this week on London businesses saying they would be "crazy" not to sign up to the London Living Wage and telling them "you will not regret it".

For specific advice and information Please contact Julian Cox, partner and head of Employment either by telephone on 0207 632 1442 or email.