The voluntary living wage (VLW) has risen today from £10.90 to £12 an hour outside London and from £11.95 to £13.15 in the capital – uplifts of 10% in both. This 10% increase is somewhat higher than the median pay award of 5% that IDR has been monitoring across the wider economy; according to the Living Wage Foundation, the Living Wage increase reflects the fact that low-paid workers spend a larger proportion of their budget on food and energy, both items that continue to be particularly affected by the persistent cost-of-living crisis.
This announcement follows confirmation by the Chancellor of the Exchequer earlier this month that the National Living Wage – the statutory minimum pay rate for workers aged 23 and over – will rise to at least £11 an hour in 2024.
The voluntary living wage is calculated by the Living Wage Foundation, which independently calculates an hourly rate to accommodate workers’ everyday living needs. This higher rate is paid by over 14,000 accredited UK employers (of which around two-thirds are from the private sector including IDR and household names like IKEA, Nationwide and Google) and covers more than 460,000 people. The VLW applies to all employees aged 18 and over and has separate rates for inside and outside of London – reflecting the higher cost of living in the capital. Following this announcement, employers now have six months to implement the new rate although they are encouraged to do so as soon as possible.
The coverage of the voluntary living wage has grown in recent years as the number of accredited employers has more than doubled since 2019 – when only 6,000 employers were paying it. In addition, IDR’s monitoring has found that many organisations in low-paying sectors use the VLW as a reference point for setting their minimum rates without formally seeking accreditation with the Living Wage Foundation. Nonetheless, there are still 3.5 million jobs that are paying less than the VLW.
