Despite the UK government's recent implementation of the largest cash boost to the minimum wage in over a decade, a sobering reality persists as millions of UK workers across the nation will find themselves more than £1,000 short of attaining a real living wage.
UK National Living Wage Rise Falls Short of Real Living Wage
The hourly rate known as the "national living wage" (NLW) will rise from £10.42 to £11.44 on Monday. Additionally, the age limit for the NLW will be lowered from 23 to 21 to include younger workers. The increase for an adult worker working full-time is £1,800 annually.
Nonetheless, workers on the legal pay floor will still fall £1,092 short of the voluntary “real living wage” established by the charity Living Wage Foundation, which is paid by thousands of firms in order to account for living expenses.
Almost 500,000 UK workers whose employers are signed up to the real living wage are getting an increase in wage of £12 an hour across the country and £13.15 in London. The rise could cover 18 weeks worth of food for a household, or 12 weeks of energy costs and housing.
The organisation estimated that in order to get salaries up to the London living wage, workers in the city would require more than £3,000 more. The difference might cover 23 weeks' worth of rent and energy expenses, or over a year's worth of food.
UK Government Halts Minimum Wage Progress Amid Economic Concerns
According to the Resolution Foundation, since the government-mandated minimum wage was introduced under Tony Blair's Labour government in 1999, it has raised the income of millions of Britain's lowest earners by £6,000 a year, making it the most successful economic policy in a generation.
After raising the minimum wage above inflation for several years in order to reach its goal of two-thirds of median wages by 2024, the government said last week that it will halt its efforts in response to growing business worries over rising costs.
Ministers requested that the Low Pay Commission, which provides advice on where to establish the legal pay floor, stick to the present goal for employees 21 and older in the commission's newly announced mandate, which was released on Wednesday. Based on present projections, the LPC stated that this would entail a 3.9% rise in the national living wage, making it £11.89 in April 2025.
Unions were "deeply disappointed" by the decision, according to TUC general secretary Paul Nowak. "The cost-of-living crisis is currently crippling millions of low-paid workers who live paycheck to paycheck."
He stated that the goal ought to be raised to 75% of the median salary. "This would help create a minimum wage of £15 per hour and provide employment for millions of people."
Though it hasn't specified what this actually entails, Labour has stated that the minimum wage should "cover the cost of living." Given that the minimum wage is less than the actual living wage, raising it is undoubtedly necessary, according to the Resolution Foundation.