Starting from tomorrow, hundreds of thousands of UK taxpayers are going to see their wages boosted by 10%. This is because their employer supports the Real Living Wage scheme. The Living Wage Foundation has stated that the rise is a “lifeline” for those on low wages, but the British Chambers of Commerce claims there is a limit on how much firms can absorb. Employers will have a choice between paying the Real Living Wage rate instead of the government-set minimum wage.
The Real Living Wage scheme is voluntary and represents what the charity believes people need to earn to afford everyday necessities. On occasion, it is more than the minimum wage set by the government, meaning employers can choose voluntarily to pay it. The rise will put the Real Living Wage at £1.58 over the National Living Wage, which is the current government-set minimum wage of £10.42 per hour for those over the age of 23. Those in London who fall under the scheme will see an increase from £11.95 to £13.15.
It is said that the Real Living Wage will result in savings, greater productivity, and greater loyalty. This, in turn, leads to a better atmosphere among colleagues. Over 14,000 employers have joined the Living Wage Foundation’s scheme so far, benefitting over 460,000 workers. It can give those on minimum wage almost £3,000 more per year than those with a standard minimum wage job, and an additional £5,323 in London. This initiative is taken up by several high-profile firms, including Everton FC, Ikea, and Lush, and half of the FTSE 100 firms are signatories. Additionally, a hundred or so firms, including West Bromwich Building Society, Aviva, and abrdn, have signed up to the foundation’s Living Hours commitment.
Meanwhile, some organizations are not keen to be involved in the scheme because of the “cost-of-business” crisis, according to Charles Cotton of the professional body for HR and people development. “While paying employees more can generate a return on investment, this return takes time,” he contends. Jane Gratton of the British Chambers of Commerce adds that some firms are not in a position to make pay increases beyond inflation due to business conditions being “among the hardest in generations.”
The Real Living Wage rate suggests that there are significant savings to be made while, at the same time, benefiting employees. Thomas Kneale, a textiles manufacturer in Manchester, claims that it saw a 60% reduction in staff turnover and a 75% reduction in absence by joining the Living Wage Foundation’s scheme. Although record numbers of employers are signing up to the scheme, the foundation’s director, Katherine Chapman, warns that there are still 3.5 million people “at the sharp end” of the cost-of-living crisis.
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