· Comment

What does the minimum wage increase really mean for workers?

April 2023's increase in the National Living Wage to £10.42 is a welcome boost for many workers who are at the sharp end of the cost of living crisis.

But while many businesses will have updated their payroll to reflect the increase, more than 12,500 employers across the UK have already made the decision to go further and pay their employees a higher, real Living Wage (currently £10.90 in the UK and a higher rate of £11.95 in London).  

More employers paying above the National Living Wage

Shift to real living wage would improve employee loyalty

Real wage stagnation will deepen poverty in the UK

A worker earning the new National Living Wage would need almost an additional £1,000 annually to bring their earnings in line with the real Living Wage. This is equal to 14 weeks of food or 11 weeks of rent and utilities.

In London, the difference is even more stark, with workers needing almost £3,000 extra to reach the London Living Wage. This difference equates to 38 weeks of food bills or 21 weeks of rent and utilities.  

The cost of living crisis is pushing millions to the financial brink, but with the lowest-paid workers closest to the edge, the extra money in the pay packet makes all the difference between getting by and being able to live a dignified life.

According to our Life on Low Pay survey, over half (56%) of workers earning below the real Living Wage reported using food banks in the last 12 months and 42% were regularly skipping meals.

A large percentage of the UK workforce is in low pay: there are currently 3.5 million people in the UK still earning below the real Living Wage, and while this figure has gone down, it is set to soar to 5.1 million by the end of this year.  

Women and minority ethnic workers are disproportionately affected by low pay and insecure work. Just over 2 million women are paid below the real Living Wage, compared to 1.4 million men.

Research shows that 45% of minority ethnic workers receive less than a week's notice of shifts compared with 28% of white workers.

It also costs to be in insecure work, known as an ‘insecurity premium’ caused by last-minute childcare and travel costs of £20-£30 per month on average. We’ve long known it can cost to be poor, but not that it costs to be in both poorly paid and insecure work. 

But there is reason to be hopeful. For the last two years, despite economic pressure record numbers of businesses have been accredited, reflecting the appetite from businesses to put people first. 

Over 12,500 businesses, including well-known brands such as Burberry, Ikea, Everton FC, and Aviva, are committed to paying the real Living Wage, in addition to thousands of small-to-medium-sized organisations.

There are also more than 60 Living Hours employers who are guaranteeing that all employees receive stable and secure hours and decent notice of shifts.  

These commitments contribute to a high-wage, high-growth economy in addition to giving employees stability and a wage that allows them to live a dignified life. Doing right by workers pays dividends for the business, too.

By paying the higher, real Living Wage, businesses often can recruit and retain the best and most motivated employees and we often hear stories about increased productivity and improved job satisfaction.

There is more to be done, and in the movement’s history, I’m not sure it has ever been more important. For businesses looking for ways to support workers, there is no better way than joining the Living Wage movement and paying a real Living Wage.  

Katherine Chapman is director of the Living Wage Foundation