“National Living Wage” not currently a real living wage

Professor Jane Wills, who has been researching the living wage for nearly 15 years, says that while the Chancellor’s Budget announcement of a higher national minimum wage is an important step in the right direction towards a living wage it is not yet right to call it one.

Prof. Wills, who is a Professor of Human Geography at Queen Mary University of London (QMUL) says that the Chancellor needs to address concerns about the roles of the Low Pay Commission and Living Wage Foundation and the impact of cuts to benefits on the calculated living wage.

Prof. Wills, said:

“Yesterday’s announcement of the introduction of a £9 per hour national wage from 2020 is an amazing endorsement for arguments for a living wage made by campaigners from QMUL, Citizens UK and the Living Wage Foundation since 2001. The Chancellor has recognised the importance of making wages high enough for people to live on and the rising public popularity of the ideas that I and others have been promoting since 2001. Indications are that 1 in 5 workers currently get less than a living wage which means that somewhere around 5 million workers should get a pay rise.

“The costs of in-work benefits have risen greatly over the past decade and, as the Chancellor has acknowledged, this acts as a subsidy to low-paying employers and reduces the incentives for employers to increase pay. This has costs for society and the taxpayer, and by increasing wages, the Chancellor is rightly shifting the burden back to employers.

“However, it is not enough to simply rebrand a higher minimum wage as a living wage and the change has implications for the Low Pay Commission which was set up to make decisions on what the labour market could bear rather than the real costs of living. Without changing the role of the Commission, the level of the National Living Wage has no credibility and can’t be said to cover the real costs of living and supporting dependents.

“In addition, the living wage has always been calculated assuming that those receiving it would also take the full benefits available to them so if those benefits are cut in the way the Chancellor suggested then the rate will have to be increased. The Greater London Authority says that the London Living Wage, which it calculates at £9.15 per hour would have to increase to £11.65 if benefits were removed.”

“It’s fantastic to see progress towards a living wage but given these concerns it’s not currently possible to call the new rate a living wage. The Chancellor’s team will need to meet with the Living Wage Foundation and the Low Pay Commission to clarify their roles and to ensure that the confusions raised by the announcement are overcome.”