Minimum Wage vs The Living Wage

From today, October 1st 2015, new government legislation has come into play and the minimum wage has increased across the UK. Great news for everyone surely?

The previous minimum wage for those aged 21 and over was £6.50 but from today this has risen to £6.70 per hour. For 18-21 year olds there has been a 17 pence increase to £5.40 an hour. And not to forget those under 18, their minimum rate has increased to £3.87 per hour, closely followed by apprentice rates who can now command an hourly rate of £3.30.

In theory, a wage rise should benefit those paid an hourly rate however The Scottish Living Wage feel strongly that this just isn’t enough…and I can see their point.

The current UK ‘Living Wage,’ as calculated by the Centre for Research in Social Policy (CRSP), comes in at £7.85 and £9.15 per hour for those living in London. They suggest that this figure is more realistic in allowing people to actually participate in society rather than simply surviving.

So let’s look back at the figures here: If the ‘Living Wage’ is coming in at £7.85, and yet legally this country can pay a 16/17 year old only £3.87 per hour, that is a hefty discrepancy at less than half of the suggested figure. It would be nice to think that all those under 18 have a family that can financially support them, but in reality this is just not the case.  In addition, if our government legally recognises marriage from the age of 16, then why are this section of society being penalised for another five years until they hit 21?

Some say there is positive change ahead with the government introducing its own Living Wage rate from April 2016. Employers should be aware that those aged 25 and over will be legally entitled to £7.20 per hour. This figure has been designed to increase each year in line with an ageing population, with the aim that 60% of the population will fall into this category by 2020. Again, great news right?

Not according to the Guardian article today which claims that this only means the number of people actually on the National Minimum Wage will have doubled by 2020, meaning more than 10% of the population will have their salary set by the state. Surely this is all relative- on paper it is great to see a planned increase, but somewhere along the line does this not just even itself out with more people back to earning the absolute minimum rate. To be very blunt, if everyone is earning the same, then does anyone actually benefit?  While some may earn more, others could be penalised with less chance of a pay rise. So can we really call this progress? I am sure some might call this inevitable.

Of course there is a huge impact on businesses across the UK and I am interested to hear about how clients are affected however I will save that for a future blog post and leave you with this: For now, the most important thing is awareness for candidates and clients alike. Employees make sure you are being paid what you are due, and Employers make sure you are adhering to the changes from today.