Employment

The ‘real living wage’ needed to live on is now £9.90 per hour - £2k per year more than the government's minimum wage

You may have heard that the national minimum wage went up in October, but this is what The Living Wage Foundation calculates is needed to live on.

Brits are facing unaffordable fuel bills, expensive groceries and stagnant pay. Image: Unsplash / Rumman Amin

A new, independently calculated “real living wage” estimates the true cost of living in the UK as almost £2,000 per year more than the government’s national minimum wage allows. 

The Living Wage Foundation set the previous rate of £9.50 per hour in November 2020 and has now increased the estimate to £9.90 across the UK — and £11.05 in London — to keep up with the rising cost of living. The group publishes the real living wage each year based on inflation and the cost of fuel, energy, rent and food.

Chancellor Rishi Sunak recently raised the national minimum wage (for 16 to 22-year-olds) and national living wage (for those 23 and over) during his Autumn Budget announcement, with the new rates taking effect from April 2022. 

The government’s national living wage will rise from £8.91 per hour to £9.50 in April. Those aged 21 and 22 will get a new minimum wage of £9.18 per hour, 18- to 20-year-olds will be entitled to £6.83 and 16- and 17-year-olds should be paid £4.81 per hour.

Anti-poverty campaigners including Helen Barnard, associate director at the Joseph Rowntree Foundation, highlighted that rising costs of living, including food and energy prices, “massively outweighed” the government’s increase.

Almost 9,000 employers have committed to paying their workers the real living wage, according to the Living Wage Foundation, including Lush, Fujitsu, Getir grocery delivery service and Cook Food. That means more than 300,000 workers will receive the 40p per hour pay increase.

A full-time worker earning the new real living wage would earn £1,930 a year more than a worker earning the government’s national living wage, according to the Living Wage Foundation.

“With living costs rising so rapidly, today’s new living wage rates will provide hundreds of thousands of workers and their families with greater security and stability,” said Katherine Chapman, Living Wage Foundation director.

“There are still millions trapped in working poverty, struggling to keep their heads above water – and these are people working in jobs that kept society going during the pandemic like social care workers and cleaners. 

“We know that the living wage is good for businesses as well as workers, and as we rebuild our economy post pandemic, the real living wage must be at its heart.”

Labour members recently voted for a £15 minimum wage as part of a “new deal for working people” at the party’s annual convention. The average hourly earnings for all employees in 2020 was £13.68 per hour.

Millions of Brits are falling short of the minimum income needed to live secure and stable lives, even if they are on universal credit or earn the national living wage, The Joseph Rowntree Foundation warned earlier this year. 

The Joseph Rowntree Foundation’s annual Minimum Income Standard (MIS) report found single people would still be £3,000 short of an acceptable income to cover rent, food and other essential costs even while working full-time on the national living wage.

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