In the sixth annual London Living Wage report the 2010 London Living Wage is calculated at £7.85 per hour, a 3.3 per cent increase on 2009.
The London Living Wage is designed to provide a minimum acceptable quality of life.
In the forward to this year’s report, Boris Johnson points out that the economic environment for Londoners remains difficult as the national economy emerges from the longest and deepest recession since quarterly records began in 1955. The recession has had serious consequences, but the capital has yet again been crowned fDi Magazine’s European City of the Future.
In order to maintain its world leading status London relies on the work of many who carry out the city’s essential functions on a daily basis – from office cleaners to care-workers in social services. The ‘London Living Wage’ aims to ensure that their skills and commitment to London’s success are recognised.
Two approaches are used to calculate the Living Wage. The “Basic Living Costs” approach estimates the costs of a ‘Low Cost but Acceptable’ budget for a selection of households and calculates the wage required to meet them. The “Income Distribution” approach takes the figure as 60 per cent of the median income for London.
The average of these two gives the “poverty threshold wage” of £6.80. In order to protect against unforeseen events a margin of 15 per cent is added to this, to yield the £7.85 figure.
On a far less scientific basis, if we simply applied the margin of difference between the National Minimum Wage (NMW) and the London Living Wage to rates for younger workers (the report does not do this) this would give a hourly rate of:
- £7.85 for adult workers (based on NMW £5.80)
- £6.50 for 18-20 year olds (based on NMW £4.83)
- £4.80 for under 18s (compared to £3.57)
Of course it could also be argued that young people without family support would need the same income as an older worker.
It should be noted that there is no legal requirement to pay the London Living Wage but the GLA argues that it makes businesses, as well as moral, sense. There are now over 2,200 employees working for GLA contractors who are benefiting from the London Living Wage. In addition, close to 100 other organisations in London have adopted it.
Trevor Bottomley
Employment & Labour Market Adviser
Central London Connexions
July 2010