Last reviewed 19 November 2021

The real Living Wage is voluntarily paid by almost 9000 UK businesses who, the Living Wage Foundation states, believe their staff deserve a wage which meets everyday needs — such as the weekly shop, or a surprise trip to the dentist.

One in 13 workers now work for an accredited Living Wage Employer.

More than £1.6 billion in extra wages has gone to low-paid workers since the start of the Living Wage movement 20 years ago and the Foundation has just announced that the rates will rise to £9.90 across the UK (40p increase) and to £11.05 in London (20p increase).

Employers should, it said, implement the rise as soon as possible and within six months so that all employees should receive the new rate by 15 May 2022.

Unlike the Government minimum wage (the National Living Wage (NLW) for over-23s is £8.91, rising to £9.50 in April) the real Living Wage is independently calculated based on rising living costs — including fuel, energy, rent and food.

The increase in Living Wage rates this year has largely been driven by rising fuel and rent costs.

According to the Foundation, a full-time worker earning the new real Living Wage would earn £1930 a year more than a worker earning the current government minimum.

In London, a full-time worker on the new real Living Wage rate would earn an additional £4173 a year compared to a worker on the current NLW and £3022 more than a worker on next year’s National Living Wage.

The most recent new Living Wage employers include FTSE 100 construction firms Taylor Wimpey and Persimmon Homes, Fujitsu, food delivery company Getir, and Capita.

They join half of FTSE 100 companies, household names including Aviva, Everton FC, Burberry and Lush as well as thousands of small businesses, which are choosing to pay the real Living Wage.

Metro mayors in London and Greater Manchester have also announced new commitments to create Living Wage City Regions which could see thousands more pay rises.

Comment by Kate Palmer, HR Advice and Consultancy Director at Peninsula

This increase to the Living Wage will be welcomed by many employees who are feeling financial pressure due to rising living costs. They may have also had their earnings reduced during the pandemic, and so this increase will enable them to replenish their bank balances.

It is generally acknowledged that in order to perform at their best, employees need to have their basic needs met.

Employers who are willing and able to pay at this rate are likely to see returns on their financial investment in increased engagement, productivity and commitment.

Paying a fair wage that enables employees to live comfortably will encourage employees to be brand ambassadors for their employer and help to attract and retain the best talent.