National Living Wage vs Real Living Wage - and why millions of workers still fall short

Asia's Tech News Daily

Some of the country’s lowest paid workers will get a 59p an hour boost from next April as the latest minimum wage rise comes into force.

The Autumn Budget is set to lay out a rise in the hourly rates for those aged 23 and above, from £8.91 to £9.50 an hour.

That means a full-time worker on the National Living Wage will see their earnings rise by an average of £1,000 a year.

It comes as the Chancellor announced a 1.25% increase in National Insurance tax from next year – a move economists say will wipe out at least 50% of the pay increase.

The National Living Wage was introduced in 2016 and sets the minimum hourly pay a person over the age of 23 can earn when working.

National Living Wage vs Real Living Wage - and why millions of workers still fall short
© Getty The government estimates the average worker will be £1,000 better off

For those aged 21-22 the National Minimum Wage rate will rise to to £9.18 an hour, up from £8.36 – an 82p increase.

Apprentices will see their pay rise from £4.30 to £4.81 an hour.

The increases are the outcome of a pay review by the Low Pay Commission – an independent advisory board which brings together economists, employer and employee representatives.

However, the pay is separate to that of the Real Living Wage – which is higher, but dependent on whether your employer is an advocate of it.

This is currently set by an independent body, and is £9.50 an hour outside of the M25 and £10.85 an hour within it. It’s due to rise again next April.

The Real Living Wage is an hourly rate set by an organisation called the Real Living Wage Foundation.

It sets its own minimum wage based on inflation and other societal factors – and employers can sign up to the scheme at any time. It’s especially important right now with inflation on track to reach 5% by the end of the year.

Most supermarkets have already joined the voluntary scheme, with firms such as Tate and Lyle, Network Rail and Capital One signing up since the start of the pandemic.

But the most recent research by the Living Wage Foundation shows that there are still 5.5million jobs – 20% of all employees – still paying less than the real Living Wage in the UK.

Laura Gardiner, Living Wage Foundation director, 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. These are the employers that will allow us to recover and rebuild from this crisis depended on those of us who have selflessly put their work ahead of their own health and wellbeing for the continued functioning of our society.”

Sara Ogilvie, director of policy at Child Poverty Action Group, said the latest government pay rise does not go far enough to protect workers from cuts and inflation.

“The minimum wage increase is welcome but it doesn’t compensate for the universal credit cut which has hit both working families and those who cannot work, leaving millions horribly exposed to rising prices and higher National Insurance,” she said.

“Hard-pressed households need a package of support to prevent them from being pulled into poverty. “

Is your employer an advocate of the Real Living Wage? Check if your employer is on the scheme, here.

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