‘Real living wage’ for UK workers rises to £9.50 an hour

More than 250,000 people who work for an employer accredited with the Living Wage Foundation are set to get a pay rise.

Almost 7,000 employers across the UK have pledged to pay the rate recommended by the Living Wage Foundation to ensure all staff earn a wage that meets the real cost of living, and covers everyday needs. The “real Living Wage” rates are independently calculated based on what people need to live on.

The rates for 2020/21 have been announced as £9.50 an hour in the UK (a 20p increase) and £10.85 in London (10p increase).

The UK Government’s compulsory minimum, the National Living Wage, currently stands at £8.72 an hour for anyone over the age of 25.

A full-time worker paid the new £9.50 real Living Wage will receive over £1,500 in additional wages annually compared to the current Government minimum. For a full-time worker in London this figure rises to £4,000.

Over 800 additional employers have been accredited with the Living Wage Foundation since the start of the Covid-19 pandemic, including Tate and Lyle Sugars, Network Rail and Capital One.

“It has been the cleaners, security guards and catering staff who have kept our factories clean, safe and well-fed over the last six difficult months,” said Gerald Mason, senior vice president of Tate and Lyle Sugars. “We’re pleased to recognise their value and role in helping us feed the nation.”

Can Technology Combat the Cost of Living Increase?

The cost of living in the UK is constantly rising just as it is everywhere in the world, but is it always the case that everything around now costs more? In April 2016 the government introduced the National Living Wage for all people aged 25+. Designed to replace the minimum wage for those who are more likely to have household bills and a family to support, the £7.20 per hour minimum was designed to meet the current costs of living in the UK.

While many have argued that the hourly rate is still too low to afford people an acceptable standard of living, the innovation is a clear sign that government is trying to address the issues faced by many. To illustrate the point, the average cost of a basic standard of living in the UK back in 2008 was £13,400 according to research by the Joseph Rowntree Foundation. In contrast, the 2016 stats suggest that the average family needs to earn at least £24,801 each year just to meet the minimum standards of living.

Costs Continue to Increase but Not in All Instances

For those trying to raise a family, the prospect of having to earn £24,000 minimum can be daunting one, but it’s also worth noting that price increases aren’t a universal phenomenon. In fact, thanks to modern technology, the cost of some of life’s luxuries has actually decreased over the last decade.

According to a report by Voucherbox, items such as TVs, laptops, phones and even taxi rides actually cost less now than they did in 2006. For example, if we look at the cost comparison chart we can see that mobiles have come down in price by almost £150. In 2006, a top-of-the-line Motorola Razr V3 cost £500 brand new. Today, the infinitely more powerful iPhone 5S can be picked up for £359.

Similarly, the average cost of a laptop in 2006 was £700, but in 2016 you can pick up a portable device for £300. Of course, as technology matures and companies compete for a share of the market, prices drop. However, that’s not the only reason: if you take the cost of a taxi ride, you can see that technology has actually helped people save money.

Thanks to companies like Uber, the average cost of a trip according to Voucherbox’s research is now £60 compared to £70 (traditional taxi) back in 2006. We know the price of petrol hasn’t decreased in that time (it’s actually risen from 89.4p per litre in Jan 2006 to 101.9p in January 2016), so it must be something else causing a decrease.

Technology May Offer a Solution

Uber has basically blown the taxi market wide open and allowed commuters to connect with more drivers. This increase in availability has driven down the cost of a taxi journey in spite of the increase in fuel prices. Although an isolated example, Uber has shown that technology has the power to decrease the cost of living. In fact, when you take into account innovations such as comparison sites that allow customers to find cheaper energy, holiday and insurance deals, there’s a lot to be hopeful for.

The overall cost of living may continue to rise, but technology can certainly help those at the lower end of the earning spectrum. Of course, government intervention is always important, but there are clearly ways in which technology will continue to cut costs in certain areas of our life.

UK Government to introduce tough fines for companies that fail to pay national living wage

British Prime Minister David Cameron has said that the government will fine unscrupulous employers who do not pay their staff the national living wage, it was reported on Tuesday.

The government’s crackdown on national living wage non-compliance includes funding for a new HM Revenue & Customs (HMRC) unit that will enforce the pay policy. Cameron was quoted as saying that the new pay policy would only work if it were “properly enforced” and added: “Businesses are responsible for making that happen, and today I’m announcing how we will make sure they do.”

According to reports, fines for non-payment will double, which means employers could be liable for a penalty of 200% of unpaid wages, up to a maximum of GBP20,000. In addition, company bosses who fail to pay the fine will face disqualification as company directors for up to 15 years.

Previously, employers were required to pay the amount they had underpaid workers, plus a penalty calculated at 50% of the underpayment, up to a maximum of GBP5,000. The penalty was increased under the coalition government.

It was also reported that in the past, relatively few firms have been fined for not paying the minimum wage. However the Department for Business announced in February that a crackdown launched in October 2013 had led to 162 firms being fined for non-compliance, as well as being named and shamed.

Currently, the minimum wage for those aged 21 and over is GBP6.50 per hour. This will increase to GBP6.70 in October. The Chancellor of the Exchequer has also announced that from April 2016, employers will have to pay a national living wage of at least GBP7.20 to employees aged over 25. The so called national living wage is expected to rise to GBP9.0 per hour by the end of the decade.