National minimum wage rise still fails to cover living costs, study shows

Know your rights, whether you are on the National Minimum Wage, National Living Wage or Real Living Wage

ALL workers received a pay boost when the National Living Wage was increased on April 1 – those aged 25 and over have been helped out by November’s Budget statement.

The new minimum wage has officially kicked in – a move that will affect at least two million workers.

It follows November’s Autumn Budget, in which Chancellor Philip Hammond confirmed hourly rates will rise across the board for employees in Britain

On Easter Monday, the National Living Wage goes up from £7.50 to £7.83 an hour – that’s a 4.7% rise on last year.

The Treasury estimates the new wage will leave full time workers on basic pay as much as £600 better off a year.

That’s equivalent to £50 a month – or 33p extra an hour.

More than 2 million workers are to receive a pay rise of at least 4.4% from Sunday, as the government’s national living wage increases to £7.83 per hour from £7.50 for over-25s. The increase amounts to more than £600 per year for full-time workers on basic pay.

But the Living Wage Foundation estimates the new government minimum would provide a worker with an annual salary worth almost £1,800 less than the real living wage, which is calculated to cover what people need to spend on basic living costs for housing, transport, childcare and food.

The foundation estimates an additional 33 working days would be required to make up the shortfall between the government minimum and its own estimate for a “real living wage” of £8.75 per hour – the equivalent of more than six weeks extra work every year.

Tess Lanning, director of the Living Wage Foundation, said about 5.5 million people earned less than the amount required to cover their regular outgoings before the government’s increase on Sunday. She said she welcomed the increase but it did not do enough to help those on low incomes.

“For these people, this is the difference between struggling to make ends meet and being able to cover the basics: from decent meals to heating bills, to the costs of a birthday cake for their children,” she said.

The shortfall in pay equates to more than six months’ food and drink bill for an average household, an average gas and electricity bill for more than a year, or almost three months’ worth of average rental payments.

The gap in London is even wider due to higher living costs, with workers in the capital thought to need an additional 84 days to earn a real living wage, which the foundation estimates would be £10.20 per hour.

Younger workers are also penalised, as the government minimum is lower for people under the age of 25. The Living Wage Foundation said those 18 and 20 would need to work an extra 135 days to receive enough pay to earn a living wage.

British workers have seen the weakest period for pay growth since the Napoleonic wars in the decade since the financial crisis, according to economists, who point to sluggish average pay growth and inflation eroding any gains.

There have been some positive signs for workers in recent weeks, after the rate of inflation fell to its lowest since the autumn and wage growth began to slowly rise amid the lowest rates of unemployment since the mid 1970s.

According to the Resolution Foundation, workers on the minimum wage are on course for their pay to increase twice as quickly as average wages between 2015-20. However, it said this was more than offset by the rollout of £14bn welfare cuts, which would have a damaging impact on low-income families.

The government’s independent economic forecaster, the Office for Budget Responsibility, has forecast average earnings after inflation will still be below their 2008 level by the middle of the next decade.

The TUC general secretary, Frances O’Grady, urged more companies to sign up to the living wage, which is a voluntary measure unlike the government minimum.

So what do you think?

Tell us in the comments.

Source :
Source :

You May Also Like