British employers who pay the voluntary “living wage” have been urged to make an early increase of more than 10 percent so that their lowest-earning workers can keep pace with rising prices.
The Living Wage Foundation, a charity that campaigns for a fair wage, said on Thursday it raised its national living wage from £9.90 to £10.90 an hour, the strongest increase in its 11-year history.
Meanwhile, the rate in London – which reflects the higher cost of living in the capital – will rise from £11.05 to £11.95 per hour.
The charity recalculates the rate annually based on what people need to live on, but has brought forward this year’s change by two months due to the cost of living crisis.
Katherine Chapman, the foundation’s director, said the existence of the voluntary rate is “vital than ever” as millions of people faced a “heat or food choice” this winter. She added that the upgrade would give workers and their families “more security and stability”.
The announcement comes a day before Chancellor Kwasi Kwarteng plans to outline a cut in national insurance, which will disproportionately benefit the wealthy.
The statutory minimum wage in the UK – the main adult rate of which is £9.50 – rose 6.6 per cent in April. But that increase, initially intended to be generous, has already turned into a real cut, with consumer price inflation reaching 9.9 percent in August.
Average wages have risen rapidly in nominal terms, causing Bank of England policymakers to worry they will contribute to continued higher inflation. But prices have risen even faster, leaving households facing the sharpest decline in living standards in at least 20 years.
Data released Wednesday by research group XpertHR shows that the median base salary employers offered their employees in the three months to August remained stable at 4 percent — high by historical standards, but well below the peaks reached in previous periods of very high inflation.
The increase in the voluntary living wage will directly affect approximately 400,000 people working for just over 11,000 employers recognized by the charity. However, there could be much more indirect impacts as some major employers, including supermarkets, use the living wage as a benchmark, albeit without committing to applying it throughout their supply chain.
Charles Cotton, a consultant to the CIPD body for HR professionals, said Thursday’s increase was “significant” but employers still need to look at other ways to support employees’ financial well-being.
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He said this included guaranteeing working hours and offering disability benefits or hardship loans, adding that bosses struggling to afford higher wages should focus on designing jobs and tasks that are better for the job. to increase productivity.
The number of recognized living wage employers has more than doubled in the past two years, as the coronavirus pandemic has raised awareness of low-paid employee contributions and prompted companies to compete for staff.
“It’s easy to blame the pandemic or Brexit. . . but the industry is struggling with staff shortages that are partly our own fault,” said Christian Kaberg, director of the St Pancras Hotel Group, which runs six locations in central London and won accreditation in 2019.
He added: “As an industry and employer, we have to start doing the right things – and one of those is paying people well.”