Thousands of UK businesses are paying a ‘real’ living wage due to labor shortages

Uptake of the voluntary living wage in the UK has increased over the past year as employers seek to retain staff amid deepening labor shortages.

According to the Living Wage Foundation, a charity that offers accreditation.

A third of those employers had signed up since the start of the pandemic, the foundation said, the fastest rate of increase in the 10 years it had operated. He cited Cardiff Business School research which found that one in 13 employees now worked for a living wage employer, with 300,000 benefiting directly.

The increase follows widespread calls for greater recognition of the contribution of low-wage workers who have kept services running during pandemic shutdowns. It also comes as many businesses struggle to hire, especially for low-wage positions, with growing demand and a shortage of workers.

“We can’t hire fast enough,” said Timo Boldt, chief executive of Gousto, the recipe kit company, which pledged to pay the higher voluntary rate in April – despite already having it. done in practice.

The company aims to double the workforce at its London headquarters, Lincolnshire factories and Warrington distribution center from 1,000 to 2,000 next year. Boldt said he felt the effects of Brexit, with fewer Europeans in operational roles or his technical team.

Gousto had always pressured his suppliers to pay the living wage, he said, and some who had been reluctant were now reconsidering because: “You see wage inflation everywhere.”

The new real living wage rate has been set at £9.90 for jobs outside London and £11.05 in the capital, significantly higher than the national living wage statutory rate, which will rise from 8, £91 to £9.50 next April. The Living Wage Foundation said its national rate rose more than London’s rate this year as Londoners were less affected by rising rents and petrol prices.

The gap between voluntary and statutory rates has narrowed in recent years as the government pursues the goal of raising the wage floor to two-thirds of median income, but the Living Wage Foundation said that even after the next year’s increase in the government wage floor, a full-time worker earning the real living wage would still earn £780 more each year, or £3,022 more in London.

Nearly 5 million employees are still being paid below the voluntary living wage and Katherine Chapman, director of the Living Wage Foundation, said many of them were “people in jobs that have kept society going for the pandemic, such as social workers and housekeepers”.

Frances O’Grady, general secretary of the Trades Union Congress, said low pay remained “endemic” in Britain, with real wages just back to 2009 levels and rising inflation threatening further stagnation. Many workers were laid off in 2020 and 2021 with 80% of the legal minimum.

However, official data shows that more and more employers are choosing to pay low-wage workers more than the law requires. Figures released by the Office for National Statistics continue to show a concentration of workers paid less than 20p of the legal minimum, but a new peak is also now visible around the £10 mark, reflecting higher pay utilization real life.

Michael A. Bynum