UK employers urged to give workers early pay rise
UK employers who pay the voluntary ‘living wage’ have been asked to give an early rise of more than 10% so their lowest-paid workers can keep pace with soaring prices.
The Living Wage Foundation, a charity that campaigns for fair pay, said on Thursday it was raising its national living wage rate from £9.90 to £10.90 an hour, the biggest increase in its 11 years of history.
Meanwhile, the London rate – which reflects the higher cost of living in the capital – will drop from £11.05 to £11.95 an hour.
The charity recalculates the rate each year based on what people need to live on, but brought this year’s change forward by two months due to the cost of living crisis.
Katherine Chapman, director of the foundation, said the existence of the voluntary rate was “more vital than ever” as millions faced a “choice of warmth or food this winter”. She added that the upgrade would give workers and their families “greater security and stability”.
The announcement comes a day before Kwasi Kwarteng, the Chancellor, is due to announce a National Insurance cut, which will disproportionately benefit the better-off.
The UK’s statutory minimum wage – the main adult rate of which is £9.50 – rose by 6.6% in April. But this increase, initially supposed to be generous, has already turned into a decline in real terms, with consumer price inflation rising to 9.9% in August.
Average wages have been rising rapidly in nominal terms, leading Bank of England policymakers to fear they are contributing to ever-higher inflation. But prices rose even faster, leaving households facing the biggest drop in living standards in at least 20 years.
Data released Wednesday by research group XpertHR showed that the median base salary offered by employers to staff in the three months to August remained stable at 4% – high by historical standards but well below peaks reached during previous periods of very high inflation.
The voluntary living wage increase will directly affect around 400,000 people working for just over 11,000 employers accredited by the charity. However, many others could be indirectly affected, since some large employers, including supermarkets, use the living wage as a benchmark, but do not commit to applying it throughout their supply chain.
Charles Cotton, CIPD’s adviser for human resources professionals, said Thursday’s increase was “significant” but that employers should still look for other ways to support workers’ financial well-being.
He said these included guaranteeing working hours and offering work-related sickness benefits or hardship loans, and added that bosses struggling to pay higher wages should focus on designing better jobs and tasks to increase productivity.
The number of living wage accredited employers has more than doubled in the past two years as the coronavirus pandemic has raised awareness of the contribution of low-wage workers and led to companies competing for staff.
“It’s easy to blame the pandemic or Brexit. . . but the industry is experiencing staff shortages which are partly self-inflicted,” said Christian Kaberg, chief executive of St Pancras Hotel Group, which operates six sites in central London and achieved accreditation in 2019.
He added: “As an industry and an employer, we need to start doing the right things – and one of them is paying people right.”