Living wage increases to £7.85

The national living wage for workers outside of London is being raised to £7.85 per hour, up from £7.65, from today (3 November 2014).

The rate for staff within London will be announced later today. It currently stands at £8.80 per hour. The annual rate is set by the Loughborough University Centre for Research in Social Policy, but the Greater London Authority sets a separate rate for the capital.

The living wage is based on the price of living factors including rent and the cost of basic retail items.

The number of companies that are committed to paying their staff the living wage has increased from 912 in September to more than 1,000 today, according to the Living Wage Foundation.

More than 5 million below living wage

Research released today by KPMG reveals that, despite the increase in the number of companies paying the living wage, there has also been an increase in employees earning less than the set benchmark.

The KPMG report estimates 5.28 million workers earn less than £7.65 per hour, the rate set in November 2013. This equates to around 22% of the working population.

A Living Wage Commission report in June 2014 suggested that there were only 3.4 million staff earning less than the living wage in 2011, meaning the figure has increased by more than 50%.

KPMG head of living wage Mike Kelly said that it is no longer easy for companies to "hide behind" the argument that paying a living wage hits their bottom line.

"There is ample evidence to suggest the opposite – in the shape of higher retention and higher productivity,” he added. “It may not be possible for every business, but it is certainly not impossible to explore the feasibility of paying a living wage.”