New research shows greater uptake of real Living Wage could boost UK economy by £1.2 billion
- 2024 saw the largest annual rise in number and proportion of low paid jobs ever recorded.
- 4.5 million UK jobs paid below real Living Wage in 2024, 800,000 more than in 2023.
- Nearly 1 in 6 (15.7%) UK jobs paid below the real Living Wage in 2024, up from 1 in 8 (13%) in 2023.
- New research shows that if a quarter of these jobs were given a pay rise to the real Living Wage, it could put up to £1.2 billion back into the UK economy.
- The real Living Wage, as set by the Living Wage Foundation, is the only wage rate based on the cost of living. It is currently £12.60 in the UK with a higher rate of £13.85 in London.
- The real Living Wage is different to the government’s ‘National Living Wage’ which is the legal minimum for workers 21 and over and is currently £11.44.
- Over 15,000 UK businesses are accredited with the Living Wage Foundation, including Aviva, Everton FC, Burberry, IKEA, LUSH and Nationwide.
New analysis of the latest Annual Survey of Hours and Earnings from the Office for National Statistics (ONS), by the Living Wage Foundation, reveals that 2024 saw the largest annual rise in the number and proportion of jobs paid below the real Living Wage ever recorded. 4.5 million UK jobs, or nearly 1 in 6 (15.7%), were low paid in April 2024, up from 3.7 million, or 1 in 8 (13.0%), compared to a year earlier. This is an increase of 800,000 low paid jobs.
The real Living Wage is the only UK wage rate calculated based on what it costs to live. These findings reveal that more jobs have fallen below this rate as wages have failed to keep up with costs, pushing more and more workers into in-work poverty. The news runs counter to findings that the number of workers paid below two thirds of median earnings – a less robust measure of low pay that the government’s minimum wage is tied to - is at its lowest level since 1997, and that average wage growth is outstripping inflation.
New research by Cardiff Business School commissioned the Living Wage Foundation also released today found that if just a quarter of those earning below the Living Wage saw their pay rise to the real Living Wage, the increase in wages, productivity and spending would deliver £1.2 billion back into the UK economy.
With low paid workers across the UK facing a continuing cost-of-living crisis, and economic growth stagnant, today’s research shows how a real Living Wage could tackle both, and support a high-growth, high-wage economy.
Low pay by sector
The hospitality sector has the highest rate of low paid jobs, with 53.6% of all jobs in the sector paid below the real Living Wage. This equates to over three quarters of a million jobs. This is roughly twice as high as the next two sectors with the highest rate of low pay; ‘wholesale and retail’ (30%) and ‘arts, entertainment and recreation’ (29.2%). Hospitality has been the sector with the highest level of low paid jobs for 13 years running.
The sector with the most low paid jobs is ‘wholesale and retail’ (1,064,000 jobs), followed by hospitality (776,000 jobs) and ‘human health and social work’ (677,000 jobs).
Low pay by region
The region with the highest rate of low paid jobs is Northern Ireland (20.6%), closely followed by North East England (19.2%) and East Midlands (18.8%). Northern Ireland also had the steepest increase in the proportion of low paid jobs compared to 2023, rising 4.6 percentage points.
If a quarter of low paid jobs in these regions were uplifted to the real Living Wage, £47 million would be added to the economy of Northern Ireland, £40 million would be added to the local economy in the North East, and £79 million would be added to the local economy of the East Midlands. London would see the biggest boost (£320m), followed by South East England (£126m), North West England (£113m), West Midlands (£91m) and Yorkshire and the Humber (£89m).
Impact of low pay
Research published last Autumn by the Living Wage Foundation found that despite inflation easing, millions of low paid workers are still being impacted by persistently high prices and inadequate pay. Nearly 2 in 5 workers paid below the real Living Wage used a foodbank in the previous 12 months, with 28% relying on them at least once a month. One in three skipped meals for financial reasons, 31% had fallen behind on household bills and 24% couldn’t afford to heat their homes. 67% of low paid workers said that being paid less than the real Living Wage has negatively affected their mental health.
The real Living Wage
The real Living Wage is the only wage rate independently calculated based on what people need to live on. It currently stands at £12.60 (UK) and £13.85 (London). For a full-time worker, that represents £2,262 more than someone earning the government’s National Living Wage. A worker on the London Living Wage would be £4,699.50 better off than someone on the National Living Wage.
In the past three years record numbers of employers have signed up to pay the real Living Wage, including to their third-party contractors like cleaners and security guards, with 1 in 7 employees now working for an accredited Living Wage Employer. Over 15,000 UK businesses are accredited with the Living Wage Foundation, including Aviva, Everton FC and LUSH, as well as thousands of small-to-medium sized businesses. Nearly half a million UK workers receive an annual pay rise to the real Living Wage rates because of their commitment to always paying the real Living Wage.
There are now nearly 200 Living Hours Employers, including abrdn, Aviva, and West Brom Building Society, going beyond payment of the real Living Wage to also provide a guaranteed minimum of 16 hours work a week, a month’s notice of shift patterns and a contract that reflects hours worked.
Over 50 employers who want to ensure their workers never face poverty in retirement are signed up to the Living Wage Foundations Living Pension accreditation. Living Pension Employers provide a Living Pension savings level using either a cash (£2,950) or percentage (12%) target, with a minimum of 7%, or £1,720, contribution coming from the employer.
Katherine Chapman, Living Wage Foundation Director, said:
“Today’s findings show the biggest rise in low-paid jobs we’ve ever seen, with millions of workers struggling to afford the basics as wages fail to reflect the cost of living.
"But we know there is a solution. Employers that commit to the real Living Wage are not only giving their staff security and stability, but they’re also helping to strengthen the economy. If just a quarter of low-paid jobs were uplifted to the real Living Wage, it would put over £1 billion back into the UK economy through higher spending and productivity. At a time when too many workers are struggling to keep their heads above water, we need more businesses to step up and pay a wage that matches the real cost of living."
Sam, a worker at Thomas Kneale, said:
“I have worked in jobs paying minimum wage, and even temporary and zero-hour contracts. It meant that money was extremely tight, and I had to make decisions on which bills I was able to pay. There was rarely anything left over for luxuries such as holidays or trips out. It felt that I was existing rather than being able to enjoy a fulfilled life. I am now in very secure employment with Thomas Kneale, where being living wage and living hours accredited, I know I have both certainty and the money to be able to have a good quality of life. It means that I can enjoy a couple of holidays a year, pay all of my bills without getting into a cycle of debt, and that itself brings health and wellbeing benefits, as it is a huge weight of my mind.”
Brett Mendell, Managing Director of Thomas Kneale said:
“Thomas Kneale has paid the real Living Wage since 2015, and it has enabled our colleagues to be able to afford a standard of living that means they are not simply on the breadline living paycheque to paycheque. We are committed to it because it’s so important for our people, and our people are the most important part of our business. It also brings significant benefits back to the business, so we always caution not to simply look at the financial cost of doing this. Employee satisfaction scores are extremely high, with colleagues commenting that they feel the company cares about them, which means they care about the company. It leads to a higher productivity rate, and high levels of customer retention.”
James Hennebry, CEO of Rosslyn Coffee, a speciality coffee shop, said:
"At Rosslyn, we believe that decent pay is fundamental not only for our team's well-being but for the success of our business too. It’s the right thing to do, both ethically and commercially. By paying the London Living Wage, we do our best to ensure that our employees can enjoy all that London has to offer. It's one of the ways we say, ‘We value you.’ This commitment has allowed us to attract and retain exceptional talent, creating a positive workplace culture that directly benefits our customers. We don't pay the Living Wage because we're a successful business. We're a successful business because we're a Living Wage employer."
Read the report: Employee Jobs Paid Below the Real Living Wage 2024 | Living Wage Foundation
Notes on data:
Data on the proportion and number of jobs paid below the Living Wage comes from the Annual Survey of Hours and Earnings (ASHE). Carried out in April each year, ASHE is the most comprehensive source of information on the structure and distribution of earnings and hours worked among employees in the UK. ASHE is based on a 1 per cent sample of employee jobs taken from HM Revenue & Customs (HMRC) Pay As You Earn (PAYE) records.
Figures on economic growth from wider uptake of the real Living Wage come from research by Cardiff Business School on the impact of increased payment of the real Living Wage across local authorities, city-regions, regions and the UK as a whole. The study first looked at the scale of below Living Wage pay across the UK (both as a whole and per smaller geographies), using the Annual Survey of Hours and Earnings (ASHE). The study then identified how this would be paid for, using the findings from research on Minimum Wages. It is assumed that this will be paid for by higher productivity, slight reduction in profits for firms, and a sight fall in working hours. A ‘multiplier’ figure is then calculated per individual worker. The multiplier figure for individuals describes the amount that is injected into the economy per individual wage uplift (measured in Gross Value Added). This is informed by the higher ‘propensity to consume’ among lower income workers. Also factored in is the reduction in government spending on means tested benefits, and higher tax returns, and the levels of demand in the economy. The study also adjusts figures to account for ‘leakages’, where money is earned in one geography and spent in another, as not all workers work where they live (and spend), the majority of their earnings.
