What is the Real Living Wage? UK 2021 rate explained and how it compares to 2022 National Living Wage increase

Thousands of workers across the UK could be in line for a pay rise, following the latest recommendations from the Living Wage Foundation.

More than 30,000 employees from nearly 9,000 companies will benefit from an increase in their hourly pay after recent hikes in fuel and rent costs across the UK.

It comes just weeks after chancellor Rishi Sunak and the government announced a rise to the National Living Wage for workers aged 23 and over from April 2022.

Here’s all you need to know about the Real Living Wage, what it will rise to and how it compares to the minimum wage brackets adopted by the UK government...

What is the Real Living Wage?

The Real Living Wage is a voluntary rate of pay independently calculated against the cost of living and rising costs, including rent, fuel, energy and food.

How much has the Real Living Wage increased?

In 2021, the Real Living Wage has increased 40p an hour in the UK, from £9.50 to £9.90, and 20p an hour in London, from £10.85 to £11.05.

Living Wage Foundation director Katherine Chapman said the Real Living Wage uplift will provide families with "greater security and stability" amid rising living costs.

She said: "For the past 20 years the Living Wage movement has shaped the debate on low pay, showing what is possible when responsible employers step up and provide a wage that delivers dignity.

"Despite this, there are still millions trapped in working poverty, struggling to keep their heads above water – and these are people working in jobs that kept society going during the pandemic like social care workers and cleaners.

"We know that the Living Wage is good for businesses as well as workers, and as we rebuild our economy post pandemic, the real Living Wage must be at its heart."

Which companies have signed up to the Real Living Wage?

Nearly 9,000 employers have signed up to the Real Living Wage pledge, including property developers Taylor Wimpey and Persimmon Homes.

Tech company Fujitsu, food delivery service Getir, and outsourcing firm Capita have also signed up to give lower paid staff Real Living Wage contributions.

They join around half of the FTSE 100 companies in compensating their employees with the Real Living Wage in the months following Covid lockdown restrictions.

Everton Football Club, fashion line Burberry, insurance company Aviva and cosmetics firm Lush, as well as thousands of independently owned businesses have joined the movement.

Meanwhile, London and Greater Manchester metro mayors have announced new commitments to create Living Wage City Regions, which could see more workers benefit from the increase.

How does the Real Living Wage compare to the National Living Wage?

The Real Living Wage is not the same as the legal minimum wage used by companies on the recommendations made by Her Majesty’s Treasury.

Minimum wage is the basic hourly rate of pay earned by low income workers, increases at different points depending on age and can sometimes be confused with the Real Living Wage.

This is because workers who are aged 23 and over earn a National Living Wage, which is currently £8.91 and set to rise to £9.50 in April 2022, after the Autumn Budget 2021 statement.

The National Minimum Wage is the phrase used for workers up to the age of 18, who earn the following rates of pay (with planned increases from April 2022):

• Aged 18 and under: currently £4.62, rising to £4.81
• Aged 18 to 20: currently £6.56, rising to £6.83
• Aged 21-22: currently £8.36, rising to £9.18

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