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More than 150,000 low-paid Londoners are set for a pay rise after the London Living Wage was increased to £14.80 an hour. The rate is voluntary but is paid by about 4,000 firms in the capital – including half of the FTSE 100 companies - to ensure all staff aged 18 or older earn a basic minimum that keeps pace with the cost of living. The new rate is up 95p an hour on the 2024/25 rate of £13.85 – an increase of 6.9 per cent. This compares with the National Living Wage, which is the legal minimum employers must pay for over-21s, of £12.21 an hour. It comes as the Office for National Statistics announced that UK’s rate of inflation remained at 3.8 per cent for the third successive month. People receiving the new London Living Wage rate will earn £5,050 more a year than the legal minimum. London mayor Sir Sadiq Khan said: “This almost seven per cent increase in the London Living Wage will make a huge difference to more than 150,000 hard-working Londoners. “Since I’ve been mayor there’s been a seven-fold increases in employers paying the London Living Wage and an almost 60 per cent increase in the London Living Wage.” However, there are more than 500,000 Londoners who earn less than the London Living Wage, according to the Living Wage Foundation, which sets the living wage rates annually. Transport for London, Ikea, Uniqlo, Shakespeare’s Globe, West Ham FC, the London Fire Brigade, the Greater London Authority and the law firm Linklaters are among the employers that pay the London Living Wage. However, unions representing NHS workers said many low-paid staff did not receive the living wage rates. Unison said the current minimum rate in the NHS in England was £12.51 – below last year’s living wage and the new one. The Living Wage Foundation also sets a rate for outside London, which has risen by 85p to £13.45 an hour. It means that almost 500,000 people working for more than 16,000 real Living Wage Employers throughout the country are set to receive an increase in pay. However not all employers make the changes immediately. Within the organisations overseen by the mayor, only a small number of staff – mostly apprentices – earn as little as the London Living Wage. In April, there were only 172 people on the rate at TfL and 17 at the GLA. The living wage rates are calculated to cover living costs, such as rent and energy bills, childcare and transport, as well as items like a warm winter coat for children, or savings for a financial emergency like a broken boiler. Recent research by the Living Wage Foundation found that 42 per cent of low-paid workers have been forced to use foodbanks in the past year, rising to 56 per cent of those caring for children. Christina McAnea, general secretary of Unison, said: "This sets a clear benchmark for the rate of pay needed to keep workers out of poverty. "Low-paid staff working for fair employers are the ones who'll see the benefits of this rise. But for most workers in public services, it's the Government's responsibility to make sure they're on a decent rate. "Workers can't give their all for the public if they're unable to meet the bills and feed their families. Thousands of NHS staff in particular will see their pay fall even further behind the real living wage rate. "That risks the health service losing many of those on the lowest pay bands, such as porters and cleaners, to supermarkets and others willing to match the hourly rate. "Ministers have to recognise this, ditch the discredited NHS pay review body system and work with unions to put it right." Katherine Chapman, executive director of the Living Wage Foundation, said: “We all need a wage that covers life’s essentials, and the real Living Wage is the only UK wage rate independently calculated based solely on what is needed to live with stability and security. “The new rates announced today will make a massive difference to workers and their families, helping them to better cope with the costs of rent, bills, food and other essentials, including in the capital where the cost of living is higher. “It remains a tough time for low-paid workers, with 4.5 million people in the UK still earning less than the real Living Wage and struggling to escape the grip of in-work poverty. That’s why we encourage as many employers as possible to do the right thing and commit to paying a wage that reflects the real cost of living. “Despite the challenges businesses face, our movement continues to grow, with over 16,000 employers now accredited. These leading employers are showing that paying the real Living Wage has a far-reaching impact on staff, businesses and society.” However there are concerns that some firms will be able to afford to pay the increase due to the state of the economy. Muniya Barua, deputy chief executive of the business campaign group BusinessLDN, said: “These are clearly challenging times for businesses and individuals alike, but for those firms that feel able to pay the London Living Wage there are a host of benefits. “Becoming a Living Wage Employer not only demonstrates your social responsibilities but can also provide a competitive edge over rivals, for instance by boosting recruitment and retention of talent or by helping to win new contracts. “To maximise the number of firms who can go the extra mile and pay the London Living Wage, it’s vital that the upcoming Autumn Budget doesn’t heap further costs on to businesses as they seek to recruit, retain and train the talent they need to thrive.” The GLA is also one of over 250 Living Hours Employers – firms or organisations that offer staff a minimum of 16 hours of work per week and a month’s notice of shifts.
