What is the Living Wage?



The calculation of the living wage gets based on the amount of money which an individual requires to be in a position where they can adequately cover their necessary living costs. Living costs are different and as such what may be the standard living wage in London may not apply in other places in the United Kingdom. More often than not, living wages vary greatly. The living wage gets its promotion from the Living Wage Foundation. This foundation receives a lot of support politically, but it gets a little endorsement from employers. There are organizations which have embraced the concept of the living wage, and they strive to pay their employees by this set amount. Such companies include but are not limited to the Greater London Authority (GLA).

Living wage vs. national minimum wage

What is the difference between the two? The living wage is considered to be an informal benchmark. Given its open status, it is not possible for employees to enforce this minimum level of pay. This situation is unlike the case of the national minimum wage. The national minimum wage gets set by the business secretary on an annual basis. The secretary derives the logic for the amount set from advice provided by the Low Pay Commission. Once the amount gets fixed, employees are expected to see to it that they pay their employees as per the stipulated regulations.
The national minimum wage is enforceable, and two oversight authorities are in place to ensure that the rule gets followed. These organizations are HM Revenue as well as Customs (HMRC). The Centre for Research in matters of Social Policy located at Loughborough is in charge of the calculation of the living wage. The GLA conducts the calculation of the living wage for London residents and has been doing so ever since the year 2005. The primary idea behind the two wages, one thing that they have in common, is that they are in place to ensure that the minimum rates offered to workers are adequate to enable them to live a decent life.

Value of the living wage

The amount of the living wage calculated depends on the location of an employee. Areas with high living costs such as London are awarded a higher living wage as compared to other poorer regions in the United Kingdom.
The living wage in London stands at an average of £9.15 per hour worked. For the rest of the United Kingdom, the payment gets set at £7.85 per hour. When the living wage gets compared to the national minimum wage, it is evident that the latter is much lower. As of 2014, the national minimum wage was at £6.5 an hour. This rate was for adults who were above twenty-one years. For the workers that were younger than twenty-one years, their price was £5.13. The difference between the two wages is quite significant. Suppose we are considering ten hours worked, a worker who gets paid as per the living wage will take £785 or more money home, depending on their location. When paid a national minimum wage rate, the same worker gets to make £650. It is quite a big difference, especially in this economy where prices keep soaring.

How much do people take home?

The office for national statistics often compiles a list that comprises of the annual survey of hours and earnings. With this list, it is possible to tell just how much people earn on average. In the year 2013, the median earnings on a weekly basis ranged from £517. This amount was a two percent increase from the previous year’s £506. In the case of men, their earnings stood at £556 each week which was an increase of one point eight percent from the previous year while women averaged £459 which was a two-point-two percent increment.
The median annual earnings for the year 2013 were £27000. However, the amounts varied from region to region. London had the highest earnings which stood at £658 while Northern Ireland showed the lowest rates of £460 per week.

How many employers pay the minimum wage?

The Living Wage Foundation undertakes the tasks of registering and accrediting of employers who pay their employees as per the stipulated living wage. Currently, the organization boasts of an accreditation of at least one thousand employers who not only pay their employees the minimum wage but they also extend such payments to their subcontracted workers. Such companies include Legal & General, Barclays, and SSE. However, many employers pay their employees an amount that lies between the national minimum wage and the living wage. Some of the people who are in support of better pay for workers claim that employees who pay meager payments are getting benefits from taxpayers. Taxpayers’ money is used in the subsidizing of wages and by not paying their employees a decent salary, such employers end up topping up the benefits that they receive from the state such as tax credits. However, other companies in the market claim that if they start paying their employees based on the living wage, they might be unable to handle the massive costs regarding salaries and would have to lay some workers off to be in a position to pay the others. As such, such companies reason that it makes more sense to give more workers the national minimum wage than for laying people off to make a few workers happy. Others also claim that the financial crisis in the country has left them in a position where they are unable to raise the wages of their employees.

Does living wage exist outside the private sector?

Yes. Some local authorities in the United Kingdom have taken it upon themselves to pay their employees the living wage. Such bodies include those in Newcastle, Cardiff, and Birmingham. Other workers have fought for their right to a minimum wage as is the case with cleaners in the House of Parliament who went on strike to demand the living wage in the year 2005. They succeeded, and they got to receive a living wage as from 2006.

Living wage commission

This organization looks into the future of the living wage. They look at ways in which the fee is achievable without putting the economy at risk. Having a living wage in place enables workers to access their basic needs which allows them to lead a decent life. Both the private and public sectors should embrace this approach.