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Real living wage rise puts pressure on UK government to raise minimum wage

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More than 300,000 workers in the UK will get a pay rise from Monday as the charity behind the voluntary real living wage raises the minimum hourly rate amid growing fears over a squeeze on household incomes this winter.

Set by the Living Wage Foundation, the nationwide “real living wage” will be raised by 40p to £9.90, while workers in London will see their pay boosted by 20p to £11.05. The changes will apply to workers at about 9,000 living wage employers who adopt the voluntary pay measure.

However, the charity warned that almost 5 million workers in Britain earn less than these amounts, putting them at risk of severe hardship from rising energy bills and mounting inflation across the UK this winter.

The rise comes as the government faces growing criticism over cuts to universal credit and plans to increase taxes on workers next year. Frances O’Grady, general secretary of the TUC, said the Living Wage Foundation figures showed an urgent need for the government to raise the legal minimum wage to £10 an hour immediately, ban zero-hours contracts and give trade unions more access to workplaces to negotiate improved pay deals.

“Low pay is endemic in modern Britain. Millions are in jobs that don’t pay the bills or put food on the table,” she said.

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Following the changes this week, the real living wage – which is used on a voluntary basis by employers including Taylor Wimpey, Aviva and Everton football club – will be almost £1 higher than the government’s national minimum. The legal pay floor currently stands at £8.91 for workers aged 23 and over, although it is due to rise to £9.50 next April in a move announced by the chancellor, Rishi Sunak, at last month’s budget.

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The foundation calculates the living wage based on what people need to live on, including the costs of fuel, energy, rent and food. It said this year’s rate had been mostly driven upwards by rising fuel costs, as well as higher rents.

It estimates that a full-time worker on the voluntary minimum would take home an extra £1,930 than the government-enforced living wage. In London, where household costs are typically higher, the difference is worth £4,173.

Katherine Chapman, director of the Living Wage Foundation, said higher pay needed to be at the heart of Britain’s post-pandemic recovery. “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,” she said.

The GMB union welcomed the living wage increase, but said that the pandemic had exposed the failures of many employers. Gary Smith, GMB general secretary, said: “Workers are facing a cost-of-living crisis, and employers face a recruitment crisis, after years of politically driven cuts and a race-to-the-bottom by many employers.”