The Government’s minimum wage, or ‘National Living Wage’, rose yesterday against a backdrop of ongoing cost of living pressures on households across the UK. The increase will be a welcome boost for low-paid workers struggling to keep their heads above water, but it still falls short of what people need to meet the cost of living.

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Whilst rising prices squeeze everyone, it’s low-paid workers who are hit hardest. With less money coming in, a far greater share of their income is eaten away by essential costs, with little to no money left over to absorb price rises. The result is severe hardship, with two in five forced to use food banks last year, according to our research into in-work poverty.

Only the real Living Wage is high enough to meet the cost of living. It is currently £13.45 in the UK and £14.80 in London to account for higher living costs in the capital. It’s worth over £1,400 a year more than the minimum wage for a full-time worker outside of London, enough to pay for three months of food or transport costs.

That extra money is a lifeline for workers, ensuring they can put food on the table, pay their bills, and deal with unexpected costs. One Manchester-based worker told us this week that after years of being stuck in dingy rentals and falling behind on bills, the real Living Wage finally allows him to live life on his own terms, free of money worries.

At the Living Wage Foundation, we work closely with businesses across a variety of sectors, and we know that it’s also a difficult time for employers who are facing increased costs. Adding to their wage bill might not feel like the most attractive option in the current context.  But our network of real Living Wage Employers, made up of thousands of businesses up and down the country, is growing every month, with more companies voluntarily signing up to pay the real Living Wage.

Many see it as an investment: having a decently remunerated workforce brings considerable benefits, not least of which are increased staff retention and productivity. Employers in industries with high turnovers also report easier recruitment once they start offering the real Living Wage.

As households worry about where prices are heading next, yesterday’s minimum wage rise will bring some relief to low-paid workers. But employers who can afford to go further should pay the real Living Wage, to make sure their workers can actually meet everyday costs and have a decent standard of living. 

Beyond the reputational benefits and moral argument, they will also reap the numerous business benefits that come from properly paying their staff.

Graham Griffiths is the Deputy Director of the Living Wage Foundation.

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