The 2011 London Living Wage - 5.7% Increase

This is the largest increase since its introduction and reflects the rising cost of living and changes to the benefits and tax credits system.

 

 

In the Foreword to the report Boris Johnson, Mayor of London, outlines how the London Living Wage (LLW) is calculated:

 

“this report takes a systematic approach to identifying what is a Living Wage in London. It shows how a wage earner paid less than about £7.25 an hour will be living in poverty, even after benefits and tax credits are taken into account. This means that in London an hourly wage rate of 22 per cent above the National Minimum Wage (NMW) rate of £5.93 is necessary just to take the wage earner above the poverty level.

 

However, this provides no margin to meet the kind of day-to-day challenges which those of us who are better off can take in our stride. As before, a margin of 15 per cent has therefore been added to the poverty threshold wage. The result is a London Living Wage of £8.30 per hour”

 

 

As mentioned last month employers such as UBS, JP Morgan, Goldman Sachs, Bank of America Merrill Lynch and cosmetics corporation L’Oreal have signed up as well as ten Local Authorities and ten London Universities. High street retailers have been slower to commit but cosmetics chain Lush recently promised to pay LLW wage to all its employees in the capital.

 

Often the most significant impact has been for staff working in cleaning, catering and security.

 

 

It should be noted that there is no legal requirement to pay the London Living Wage but Boris Johnson argues that it makes businesses, as well as moral, sense. 

 

“Paying the London Living Wage is not only morally right - with the potential to massively reduce child poverty in London - but also it makes good business sense. What may appear to a company to be an unaffordable cost in a highly competitive market is more appropriately viewed as a sound investment decision. I believe that paying decent wages reduces staff turnover and produces a more motivated and productive workforce.”

 

 

The report does not address the issue wages for younger workers. It could also be argued that young people without family support would need the same income as an older worker.

 

However, on a far less scientific basis, if we simply applied the margin of difference between the NMW and the LLW to rates for younger workers (of course, the report does not do this) this would give a hourly rate of:

 

£8.30 for adult workers (based on NMW £5.93)

£6.90 for 18-20 year olds (based on NMW £4.92)

£5.10 for under 18s (compared to £3.64)

£3.50 Apprenticeship rate (compared to £2.50)

 

Although not a systematic assessment like LLW, the rates above might give a better indication of what rates should be in London than the NMW.

 

Read the full report here.

 

This is the largest increase since its introduction and reflects the rising cost of living and changes to the benefits and tax credits system.

 

 

In the Foreword to the report Boris Johnson, Mayor of London, outlines how the London Living Wage (LLW) is calculated:

 

“this report takes a systematic approach to identifying what is a Living Wage in London. It shows how a wage earner paid less than about £7.25 an hour will be living in poverty, even after benefits and tax credits are taken into account. This means that in London an hourly wage rate of 22 per cent above the National Minimum Wage (NMW) rate of £5.93 is necessary just to take the wage earner above the poverty level.

 

However, this provides no margin to meet the kind of day-to-day challenges which those of us who are better off can take in our stride. As before, a margin of 15 per cent has therefore been added to the poverty threshold wage. The result is a London Living Wage of £8.30 per hour”

 

 

As mentioned last month employers such as UBS, JP Morgan, Goldman Sachs, Bank of America Merrill Lynch and cosmetics corporation L’Oreal have signed up as well as ten Local Authorities and ten London Universities. High street retailers have been slower to commit but cosmetics chain Lush recently promised to pay LLW wage to all its employees in the capital.

 

Often the most significant impact has been for staff working in cleaning, catering and security.

 

 

It should be noted that there is no legal requirement to pay the London Living Wage but Boris Johnson argues that it makes businesses, as well as moral, sense. 

 

“Paying the London Living Wage is not only morally right - with the potential to massively reduce child poverty in London - but also it makes good business sense. What may appear to a company to be an unaffordable cost in a highly competitive market is more appropriately viewed as a sound investment decision. I believe that paying decent wages reduces staff turnover and produces a more motivated and productive workforce.”

 

 

The report does not address the issue wages for younger workers. It could also be argued that young people without family support would need the same income as an older worker.

 

However, on a far less scientific basis, if we simply applied the margin of difference between the NMW and the LLW to rates for younger workers (of course, the report does not do this) this would give a hourly rate of:

 

£8.30 for adult workers (based on NMW £5.93)

£6.90 for 18-20 year olds (based on NMW £4.92)

£5.10 for under 18s (compared to £3.64)

£3.50 Apprenticeship rate (compared to £2.50)

 

Although not a systematic assessment like LLW, the rates above might give a better indication of what rates should be in London than the NMW.

 

Read the full report here.