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'Real living wage' increases to £9.50 an hour - are you due a pay rise?

'Real living wage' increases to £9.50 an hour - are you due a pay rise?

Over 250,000 workers are set to receive a pay rise as the 'real living wage' has increased to £9.50/hour.

The real living wage is an hourly rate of pay calculated by the Living Wage Foundation charity based on what people need to live on. It's paid voluntarily by almost 7,000 UK employers but is separate to the national living wage, which is a legal minimum rate set by the Government. 

And the living wage rate is now increasing by 20p from £9.30 to £9.50/hour across the UK, and by 10p from £10.75 to £10.85/hour in London.

This means an employee earning the new real living wage will earn 78p/hour more than someone earning the Government's current national living wage for the over-25s, while a worker in London would earn £2.13/hour more. 

The new real living wage rates are effective from today, though employers who are already part of the scheme will have six months to bring in pay rises. 

What is the real living wage?

Employers can voluntarily sign up to become living wage-accredited, meaning they pay all their workers at least the real living wage.

Almost 7,000 employers have signed up, including 800 since the start of the coronavirus pandemic. However, there are still many who haven't – new research from the Living Wage Foundation has found that around a fifth of employee jobs still pay less than the real living wage. 

Here's how the real living wage compares to the national living wage for over-25s and other minimum rates set by the Government:

How minimum and living wages compare

TABLE_CELL_STYLE Real living wage Real living wage (in London) National living wage National minimum wage (1)
Ages All All 25+ 21-24 18-20 Under 18 Apprentice
Current rate (2) £9.50 £10.85 £8.72 £8.20 £6.45 £4.55 £4.15
Annual salary (3) £18,525 £21,157.50 £17,004 £15,990 £12,577.50 £8,872.50 £8,092.50

(1) Applies from school leaving age, which varies around the UK. (2) As of Monday 9 November, though real living wage employers will have six months to implement the new rate. (3) This is an estimation based on an employee working 37.5 hours per week for 52 weeks. Actual annual salaries will vary.

It's worth noting that the national living and minimum wage usually rises every April, and Government has consulted on raising the national living wage to £9.21 from April 2021. 

The Government has also previously set out plans to expand the national living wage to cover workers aged 23 and over from 2021, and aged 21 and over within five years.

When the national living wage was first announced, MoneySavingExpert.com founder Martin Lewis said: "This is not a living wage. [George Osborne, the Chancellor at the time] has naughtily nicked the name from the Living Wage Foundation... By using the valued brand of 'the living wage', even though he's not paying that amount, he hopes to get extra credibility."

What does the Living Wage Foundation say? 

Living Wage Foundation director Laura Gardiner said: "It’s an incredibly challenging time for us all, but today’s new living wage rates will give a boost to hundreds of thousands of UK workers, including thousands of key and essential workers like cleaners, care workers, and delivery drivers who have kept our economy going.  

"Since the start of the pandemic employers have continued to sign up to a real living wage. During Living Wage Week it’s right that we celebrate those employers that have done right by workers and families, providing them with much needed security and stability even when times are hard. These are the employers that will allow us to recover and rebuild from this crisis.”  

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