Campaign to adopt the Living Wage

Posted by Rhiannon Jenkins on
The retail sector is coming under pressure to increase pay for its workers as the campaign for employers to adopt the Living Wage gathers pace.

The Guardian has reported this issue being raised at Next’s annual meeting and we understand that a group of investors is calling on chains such as M&S, Tesco, Morrisons and Sainsbury’s to adopt the Living Wage as their pay threshold. It remains to be seen whether this is something that is picked up by other groups in support of the campaign.

The Living Wage is an hourly rate that is set independently and is calculated by reference to the basic cost of living in the UK. The current rates are £9.15 an hour in London and £7.85 across the rest of the country. It is currently paid by employers on a voluntary basis but there is an active campaign for the higher rates to be more widely adopted. Currently, around 1,500 employers have signed up to pay the Living Wage. They cover a range of sectors in all parts of the country and include Nationwide, ITV, Oxfam, Transport for London and the National Assembly for Wales.

The issue of the Living Wage was highlighted as a key issue by the major parties during the election with both the Government and the opposition pledging their support of the scheme where employers can afford it. While support was voiced, there does not appear to be a move towards imposing these higher rates upon employers on a compulsory basis and employers are safe to continue using the National Minimum Wage rates set by the Government as the lower threshold when calculating pay.

The issue of pay was however a key theme during the election campaign trail with the Conservatives indicating a plan to link national minimum wage rates to the tax free allowance so that the lowest earners will not be required to pay any income tax by 2020 with minimum wage rates (based on current indications) likely to be in the region of £8 an hour.

This is a considerable increase to the current rate of £6.50 per hour for those aged 21 and over. It remains to be seen whether this scheme is ultimately introduced but, in the meantime, there is a clear movement towards increasing the minimum hourly rates which will be set at the following levels from 1 October 2015:

  • The adult rate will be increased by 3% to £6.70 an hour
  • The apprenticeship rate will be increased to £3.30 an hour (rather than to the recommended £2.80 an hour)
  • The young workers rate will be increased by 2.2% to £3.87 an hour

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Rhiannon has extensive experience in advising clients across a wide range of sectors in employment.

Rhiannon Jenkins
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