The Real Living Wage has increased, but is it actually benefitting employees?

Earlier this week it was announced that the Real Living Wage has been increased from £8.45 to £8.75 per hour across the UK and from £9.75 to £10.20 per hour in London. The changes have been driven largely by inflation, higher private rents and transport costs, and the new figures have been calculated to reflect the actual cost of living required in order to sustain a decent quality of life in the UK and London.
However, the Real Living Wage remains voluntary, unlike the mandatory National Living Wage put in place by the Government. Further, despite more than one thousand employers signing up to pay the Real Living Wage since Living Wage Week last year (including Google and Ikea), 5.5 million people across the UK (comprising 21% of the workforce) are still being paid less than the Real Living Wage. One of the criticisms of the Living Wage campaign was that it targeted sectors that do not tend to have significant numbers of low paid staff – as such, it may not, as yet, have had the desired impact for those who need it the most.
Further, there have been questions around how employers are offsetting the additional cost of meeting the Real Living Wage – some employers have cut overall pay packages to mitigate the costs of increased pay, for example stopping overtime rates and cutting back hours. As such, the overall benefit being passed to employees is, in some cases, questionable.
On a more positive note, the increase in the Real Living Wage will see more than 150,000 employees get a pay rise, as more than 3,600 employers have now signed up to pay the Real Living Wage since it was introduced. Among these is Heathrow, which is set to become the first Real Living Wage airport by the end of 2020.

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Elizabeth Marshall

About Elizabeth Marshall

Elizabeth is a senior associate in the People, Reward and Mobility practice of Dentons' London office, specializing in employment law. Elizabeth works closely with national and international organizations, as well as senior executives, and has more than 10 years of experience advising on the full range of employment law issues, having qualified in 2010.

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