Record rise in London Living Wage puts £5.5 million in pockets of capital’s low paid workers

2 May 2011

The Mayor of London Boris Johnson has today announced that the London Living Wage will increase by more than five per cent to £8.30 per hour. The rise of 45 pence on last year’s figure - the biggest annual increase since the wage was introduced in 2005 - will help further reduce poverty levels in the capital.

The new figure means the London Living Wage has increased by almost a quarter since it was first introduced. The latest rise reflects the high level of RPI inflation, which has raised the cost of living and resulted in the need for the rate to increase to ensure recipients do not suffer a fall in real living standards.

More than 100 London-based employers have now signed up to the London Living Wage, a three-fold increase on the 27 who had committed to the policy when the Mayor was elected in 2008. Nearly all major banks in London and all the major law firms pay the London Living Wage, and across the GLA Group, more than 3,000 employees receive the wage.

Research carried out by Queen Mary University of London estimates that since its introduction in 2005, the London Living Wage has benefited almost 10,000 workers boosting their pay by an extra £60 million. Workers in the capital currently paid the living wage will see an extra £5.5 million in their pocket once the new rate is applied.

The new rate is outlined in the seventh annual London Living Wage report, A Fairer London: The 2011 Living Wage in London, which has been published today by GLA Economics. The report concludes an hourly wage rate of 22 per cent above the National Minimum Wage (NMW) rate is needed in London just to take the wage-earner above the poverty level. Around one in 10 workers in the capital currently receive less than the poverty threshold, and one in six receive less than the £8.30 London Living Wage.

The Mayor of London Boris Johnson said:

“Decent hard working Londoners deserve proper reward for their labours, and I'm delighted that a growing number of organisations recognise that it suits them as well as their staff to pay the London Living Wage.

"It really is a win win for employers as paying a fair wage fosters a loyal and motivated workforce, while at the same time continues to help pull many Londoners out of poverty and boost the capital's economy.

"Already many major employers have joined us in signing up and I urge others to look seriously at the benefits and join this important crusade.”

Paul Regan, Trustee of London Citizens, said:

“We welcome the new figure of £8.30 and congratulate the Mayor on his outstanding leadership on the Living Wage. Ten years after London Citizens launched the campaign, we are now launching the Living Wage Foundation to ensure even greater success in the coming decade. There are still hundreds of thousands of Londoners in working poverty and there is no excuse for the employers responsible. It’s time for all London employers to go Living Wage.”

Richard Reid, London Chairman for KPMG said :

“We have been paying the Living Wage since 2006 and have found that it is not just the fair thing to do, but also makes good business sense. Since its introduction, staff turnover has reduced and productivity has increased as attitudes are more flexible and positive.

“Companies across the capital cannot function without the efforts of an army of staff who work behind the scenes and it’s only right that they are rewarded fairly for the role that they play in keeping the City functioning.

"London is a fantastic place to live and work, but it also has serious issues with people living in poverty. Employers should be looking at ways in which they can help to address these issues by rewarding staff fairly which will help people in low paid roles out of the poverty trap that can come with living in a city like London. It's good for staff and good for London."

TUC Regional Secretary for London Megan Dobney said:

“With living costs soaring across the capital, London’s low paid need all the help they can get.

"Next year’s living wage will ensure their salaries don’t fall even further behind the rest of London and the news will be an enormous relief to many a low paid worker currently struggling to provide for their families.

“It’s encouraging to see more firms and organisations than ever before signing the commitment to pay the London living wage. In those workplaces whose employers have yet to start paying it, unions will keep up the pressure on them to do so, until poverty wages become a thing of the past for Londoners.”

The 2011 Living Wage report can be downloaded at:

http://www.london.gov.uk/publication/fairer-london-2011-living-wage-london