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News: Living Wage Foundation welcomes pay rise for UK’s Poorest Workers, but urges employers to go further

On April 1st the government’s National Living Wage (NLW) will rise from £7.50 to £7.83 for workers over 25.

Research conducted by the Living Wage Foundation shows that a worker on the new government minimum would earn an annual salary worth £1,794 a year less than the real Living Wage, based on what employees and their families need to get by (1). It would take 33 additional working days to make up this shortfall, the equivalent of working over 6 weeks extra every year. (2)

This additional £1,794 could pay for:

  • More than six months’ food and drink bills for an average household - £1,508 (3)
  • Over a year’s average gas and electricity bills - £1,250 (4)
  • Almost 3 months' average rent - £1,738 (5)

For workers in London the gap is even wider, with full-time workers earning the new government minimum set to earn £4,622 less than those earning the independently-calculated London Living Wage. These workers would need to work 84 more days to earn a real Living Wage, or nearly four months.

The gap between the government minimum and the real Living Wage is widest for young people aged 18-20. They would earn just £11,505 a year, or £5,558 a year less than a full-time worker of the same age earning a real Living Wage. They would need to work 135 extra days, or over six months longer, to earn a real Living Wage.

    Tess Lanning, Director of the Living Wage Foundation, said:

    “We welcome any steps to close the gap between the government minimum and the wage employees and their families need to get by. But over 5.5 million workers still earn less than the real Living Wage calculated according to what people need to live. For these people, this is the difference between struggling to make ends meet and being able to cover the basics, from decent meals to heating bills, to the cost of a birthday cake for their children. The only way we will fully close the gap is for more businesses and organisations to voluntarily choose to pay the real Living Wage, not just the government minimum.”

      "The only way we will fully close the gap is for more businesses and organisations to voluntarily choose to pay the real Living Wage, not just the government minimum.”

      Tess Lanning
      Director,
      Living Wage Foundation

      Notes:

      1. These calculations are based on working for 37.5 hours a week, for 52 weeks. £8.75 x 37.5 x 52 = £17,062.50 for someone earning the real Living Wage, compared to £15,269 for a full time worker, over the age of 25 (and therefore eligible for the National Living Wage), earning the government’s new National Living Wage rate of £7.83.
      2. Not including weekends, 33 days would equal more than 6 weeks additional work.
      3. Average weekly household food and drink bill is £58.00 x 52 weeks = annual food and drink bill of £3,016. Half of this is £1,508 
      4. Combined prepayment average gas and electricity bill = £1,250. (DECC Quarterly energy prices, 2017
      5. In 2016-17, the average private rent outside London was £158 per week. Eleven weeks (nearly 3 months) private rent is therefore £1,738 
      31st March 2018, 00:01
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