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UK living wage rises to £7.65

The UK living wage, the rate of pay an individual needs to cover basic costs of living, today rose by 20p to £7.65 an hour.

The rise equates to a pay increase of up to £400 a year for more than 30,000 low-paid workers, according to the Living Wage Foundation, which promotes the rate. It is calculated annually by the Centre for Research in Social Policy at Loughborough University. 

The living wage is higher than the legal minimum wage of £6.31. Although it is not mandatory, 432 employers (up from 78 employers last year) have signed up to a campaign to pay the living wage instead of the minimum. Member companies include Barclays, KPMG and Pearson.

Yesterday, Labour leader Ed Miliband pledged to introduce tax rebates for employers paying the living wage if his party is re-elected.

Living in London

The living wage is higher in London, the most expensive place to live in the UK. The capital now has a living wage of £8.80, a rise of 25p.

Launching the new rate at an event this morning, Boris Johnson said: “More and more London firms are recognising the benefits of fair remuneration for all of their workforce.

“Paying the London Living Wage ensures hard working Londoners are helped to make ends meet, providing a boost not only for their personal quality of life but delivering indisputable economic dividends to employers too. This in turn is good for London’s productivity and growth.”

A persistent problem

KPMG research released today found about 5.24 million people (21% of the workforce) are being paid less than the living wage in the UK, up from an estimated 4.82 million (20%) last year.

According to the study, young people (under 21), women and part-time workers are more likely to be paid less than the living wage. It is also more common in the private sector than public sector.

The report said the increase in low-paid workers is mainly due to living costs outstripping wage inflation.

Marianne Fallon, head of corporate affairs at KPMG, called low pay a “real problem”.

“People on less than the living wage can seriously struggle to make ends meet,” she said. “Earning a living wage can make a huge difference to individuals and their families, enabling them to afford a basic standard of life.”

“For many businesses, paying the living wage rate need not actually cost any more. At KPMG, we have found that better staff performance and motivation combined with lower absenteeism and turnover cancels out the extra salary costs.”