In its fifth annual report, published in May 2009, the GLA’s Living Wage Unit takes a systematic approach to identifying what a living wage is in London.
Despite the recession, London remains an engine of the UK economy and has many top earners. However, in order to maintain its world leading status it 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. It is right that their skills and commitment to London’s success are recognised, and one of the most fundamental ways of doing this is to ensure that all Londoners are paid appropriately. According to the report that means being paid at least the ‘London Living Wage’, which is designed to provide a minimum acceptable quality of life.
The report shows how someone paid less than about £6.65 an hour will be living in poverty, even after benefits and tax credits are taken into account. This means that in London you need an hourly wage rate of 16 per cent above the National Minimum Wage (NMW) rate of £5.73 just to take you above the poverty level.
However, this provides no margin to meet the kind of day-to-day challenges that those who are better off can afford to take in their 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 £7.60 per hour - an increase of 2.0 per cent on last year's figure and a 13.4 per cent increase in the four years since its introduction.
If we applied the same margins to the NMW for younger workers (the report does not do this) this would give a London wage of:
• £7.60 for adult workers (compared to £5.73 NMW, as mentioned above)
• £6.35 for 18-21 year olds (compared to £4.77 NMW)
• £4.70 for under 18s (compared to £3.53)
The NMW is due to increase in October 2009 and updated rates (based on same calculations) would be:
• £7.70 for adult workers (based on NMW £5.80)
• £6.40 for 18-20 year olds (based on NMW £4.83 – 21 year olds are being moved to adult rate)
• £4.75 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.