Pay rise for thousands of workers as Real Living Wage rises to £12.60 an hour – but is it enough?

When Jo McMahon found out the hourly rate for her new job, she started “actually laughing”.

“I was like, wow,” she recalls. “I said I didn’t even know this existed.”

Unfortunately, such incredulity normally suggests a very low rate. But Jo’s pay exceeded her expectations. Now a print worker at Manchester schoolwear company One+All on the Real Living Wage, the grandmother-of-two had previously worked for minimum wage.

“Prior to taking this job, I worked at a playgroup, so I was on low wage. At that point, I don’t even think I knew the Real Living Wage existed,” she recalls. “So I was just working, just cracking on. It wasn’t the best.”

One+All is one of the 15,000 businesses signed up to the Real Living Wage – a voluntary pay standard, independently set by the Living Wage Foundation. This week, rates will rise to £12.60 an hour across the UK (60p or 5% increase), and £13.85 an hour in London (70p or 5.3% increase).

Half a million people will enjoy the inflation-beating pay-rise. The new Real Living Wage rates are now worth more than £2,262 more per year in the UK than the legal minimum, and upwards of £4,700 more in London.

Disability prevents Jo’s husband from working, so she is the sole earner in the family. The additional money makes a “big difference”.

“I can save a bit more,” she says. “I’m not thinking, ‘Oh, I owe so much money out. Now I’ve got to pay that off and then I’m still struggling.’ “It’s just nice that now I can think to myself, ‘At the end of the month I can go and get my hair done.’ I can go and do these little things.”

Since April this year, the statutory minimum wage (officially, and somewhat confusingly, termed the National Living Wage) has been £11.44 per hour for employees aged 21 and over. For a person working full time, that equates to around £23,795 per year.

As the cost of living crisis grinds on, it simply isn’t sufficient.

Some 14.4 million people in the UK live in poverty. Work isn’t enough to keep the wolf from the door: 63% of children and working-age adults in poverty in 2022/23 lived in families where at least one adult was working at least part-time. There are currently three million children in working households living in poverty, up from 2.1 million in 2010.

The LWF’s own research suggests 42% of Britain’s 3.7m low paid workers have less than £10 left each week after covering essential expenses. More than a third (39%) have used a food bank in the past year, and 32% have skipped meals for financial reasons.

During lockdown, Jonny was a carer. Low pay and a lack of time off took a toll on his mental health and finances.

“What happens when you’re on a minimum wage is that you’re kind of relying on the payday to payday,” he told the Big Issue. “You don’t really look at it until you have to, and then you realise that you don’t have a rainy day fund, you don’t have an emergency fund.”

Jonny is now a customer service advisor at Apetito, a meals service providing food for hospitals, care homes and local authorities. He is a recipient of the Real Living Wage – and describes it as a “great thing”.

“It should really be talked about. I think the fact that it’s not just living day-by-day, people are actually able to save a bit, people are able to take some kind of some holiday when they need it. I think it does a lot for your mental health as well”, the 37-year-old says.

The Real Living Wage is calculated based on actual living costs, said Katherine Chapman, Living Wage Foundation director.

“Low paid workers have been hardest hit by the cost of living crisis and are still struggling to stay afloat amidst persistently high prices,” she said.

Nearly half a million workers will welcome the increase.

It’s a step in the right direction, said Zack Polanski, a member of the London Assembly and the deputy leader of the Green Party of England and Wales since 2022. But it “simply isn’t enough”.

“We live in a country of mass inequality. A little progress is good, but of course, we can’t write it off as task accomplished,” he said.

Polanski called for the adoption of universal basic income (UBI), a system where the government provides a regular, unconditional payment to all citizens and residents. It provides a minimum income floor to help alleviate poverty.

“We always need to be having two parallel conversations with any policy area, but particularly around poverty. The first is what needs to happen right now, today, to make sure people can meet their basic needs. For example, to get off the streets overnight. Or to pay for essentials. The [real] Living Wage falls in this category.

“But then I think we have to have another conversation, which is about long term holistic change. When people are suffering, any alleviation of that is a positive direction. But we shouldn’t keep using plasters. We do need big, transformational, holistic change.”

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