The living wage is a higher, voluntary rate of pay which businesses can opt-in to
Some of the capital’s lowest-paid workers received a pay rise of six-point-nine per cent today, as the London Living Wage increased to £14.80. The living wage is a higher, voluntary rate of pay. Businesses can opt in to give their employees a better standard of life.
But in a city as expensive as London, is a salary of £14.80 per hour enough to cover rent, bills and live a little? And more importantly, just how many of us are now earning less than the London Living Wage?
A full-time worker, of 37.5 hours per week, earning the new London Living Wage will now be earning £28,860 per year – this is around £5,000 more than those on the National Living Wage of £12.21 per hour for over 21-year-olds. Do you earn more than the new London Living Wage? Have your say with other readers in our comments section here.
There will be plenty of people out there who think that a living wage of £28,860 isn’t enough. But Manny Hothi, Chief Executive for Trust for London, said that the new amount is a “fantastic increase for workers on low income.”
He said: “If you’re on a low income, then 50-60 percent will be going on rent and in the past few years, especially for those on lower incomes, there have been steep rises in the cost of their bills and food. There is little room for manoeuvre for those households so a higher hourly pay gives people more space in their lives to do things, rather than just paying rent and bills.”
Manny added that at Trust for London, they often hear stories of families being able to buy their children new school uniforms, save more money or do extra things at Christmas. He added: “Its stories about how parents can be more present and help them participate more in school and the community life, pay for technology, clothing and trips which they couldn’t before.”
But is this figure really enough to live in London? Financial experts Unbiased told MyLondon that a good general rule of thumb to live well is to budget 50 per cent of income on necessities, like bills and food, 30 per cent on living costs and 20 per cent for savings.
For those on the London Living Wage, this means a budget of £1,012.60 for necessities, £607.50 for recreation and £405 for saving. The latest data from SpareRoom puts the average costs of renting a room in London at £995 per month. Using the Unbiased rule, after deducting for tax and national insurance that would leave just £17.60 for bills, food and transport.
This means that is those on the living wage would almost certainly need to take some of the money from their spending or saving pot. But, while the amount may not be enough to live exactly as Unbiased recommends, it does mean that a single person flat sharing should be able to live, enjoy some recreational activities and save a little.
A lot of the people who are on the London Living Wage are also parents, who have additional costs to pay for. A single father or mother would likely find this a difficult sum of money to raise a family on.
Manny said: “I think its a baseline, so I’m not saying living in London on £14.80 per hour will let you take full advantage of the city but it’s an absolute baseline that many employers are signing up to providing – its a starting point and helps to lift hundreds of thousands of people out of poverty in this city.”
Katherine Chapman, Executive Director of the Living Wage Foundation, said: “We all need a wage that covers life’s essentials, and the real Living Wage is the only UK wage rate independently calculated based solely on what is needed to cover rising living costs. The new rates announced today will make a massive difference to workers and their families, helping them to better cope with the costs of rent, bills, food and other essentials, and to live with stability and security.
“It remains a tough time for low-paid workers, with 4.5 million people still earning less than the real Living Wage and struggling to escape the grip of in-work poverty. That’s why we encourage as many employers as possible to do the right thing and commit to paying a wage that reflects the real cost of living.
“Despite the challenges businesses face, our movement continues to grow, with over 16,000 employers now accredited. These leading employers are showing that paying the real Living Wage has a far-reaching impact on staff, businesses and society.”
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