Explaining UK wage rates.

The gap widens between the UKs national living wage and the real living wage

Inequality, Living wage

It is ever more clear that employment is not an automatic route out of poverty in the UK. In this blog, Amy Hill outlines the difference between the national living wage and the real living wage and explains how Oxfam GB is committed to ‘decent’ work for a decent standard of living. 

Explaining UK wage rates.

Explaining UK wage rates. Credit: Living Wage Foundation

Higher minimum rates of pay were recently announced by the Living Wage Foundation (LWF).  Accredited Living Wage employers must now pay their staff £9.75 an hour in London, and £8.45 everywhere else in the UK.  Oxfam- as a living wage employer and principal partner of LWF will be raising its rates accordingly.

Employers voluntarily sign up to paying these rates, and in doing so, join a movement which is not only recognised for good practice in employment, but has also evidence to show that when wages are raised, then lower staff turnover and improvements in staff performance follow suit.  The rate is calculated each year by the Resolution Foundation, based on the best available evidence about living standards in London and the UK.

Separate to this- the UK Government announced a higher minimum wage for employees over 25 in April 2016, calling it the ‘National Living Wage’. This rate is not based on living costs, but on a target to reach 60% of median earnings by 2020. Under current forecasts this means a rise to less than £9 per hour by 2020. It currently stands at £7.20 (or £6.70 for those under 25) and has no London weighting attached.

“Being paid the Living Wage by Oxfam has made an absolutely huge difference”, Max Bell

The Gap between the LWF ‘Real Living Wage’ and the governments ‘National Living Wage’ widened further recently when the 2016 rates were announced. Someone being paid the LWF rate in London would get paid £2.55 more each hour than someone on the minimum wage. That would add up to £20.40 more a day, and over the course of a 40 hour week would be a huge £102 difference. Outside of London, the difference over a week is still a significant £50. A monthly gas bill, 2 pairs of children’s shoes, or 4 months TV license.

It is increasingly clear that having a job is no longer a guaranteed way to lift people above the poverty line, and the Real Living Wage aims to address this reality.

A testimony from Max Bell, an Oxfam Trainee:

“Not all of us are able to take on unpaid internships far from home, or use family connections to secure previously hidden employment opportunities.

I relocated 180 miles for my current job, and I wouldn’t have been able to afford to do so, without knowing that I was going to be paid the Living Wage, and be able to pay all of my bills from month to month.

Being paid enough to live and thrive also means that I am able to visit family and friends reasonably regularly – rather than the relocation for my job cutting me off from vital pre-existing social and personal networks, away from where I currently live and work.

Having previously had numerous jobs that were not paid the Living Wage, it was becoming increasingly difficult to even take part in social and personal activities – and simply impossible to reasonably afford living by my own means.

With the cost of living increasing all the time, this has meant that I can be a tax-paying, contributing member of society- whilst being able to have an active social and personal life, and avoid getting into ever deepening spirals of debt and despair.”

Oxfam and Decent Work

To have a ‘decent’ standard of living and not just survive, we think a job should offer more than just enough to get by. This year we have conducted first-hand research that looked at which other factors- as well as fair pay- are important for employees to feel that their work supports a fair and just standard of life.

Decent work for Scotland’s low paid workers: a job to be done, is the culmination of a 12-month long study by Oxfam and the University of West of Scotland. More than 1500 mostly low paid workers in Scotland gave their views about what ‘decent work’ means to them, and at the top of the list were the following factors:

  •  A decent hourly rate
  • Job security
  • Paid leave
  •  A safe working environment
  • A supportive line manager

These top five priorities show that employers have fairly modest- but fair- expectations of a job, and seek change in areas that are well within the remit and control of businesses and government. Oxfam’s report therefore makes a number of recommendations to employers and policy makers around enforcing basic employment conditions, rewarding good employment practice, and prioritising a way of judging the quality of the jobs market not solely by the number of people in work.

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Author
Amy Hill

Amy Hill

Amy is the Raising Voices Officer with Oxfam UK Programme team. Her role is to communicate issues affecting people in poverty in UK to a wider audience and empower people to speak out, get their voices heard and their issues on the table.