The living wage is calculated according to the basic cost of living and is designed to provide a "minimum acceptable quality of life". "By building motivated, dedicated workforces, the living wage helps businesses to boost the bottom line and ensures that hard-working people who contribute to London's success can enjoy a decent standard of living," said London mayor Boris Johnson in announcing the new rates.
Labour leader Ed Miliband said on Monday he would seek to bring millions more workers into the scheme if the party is elected. "There are almost five million people in Britain who aren't earning the living wage: people who got up early this morning, spent hours getting to work -- who are putting in all the effort they can -- but who often don't get paid enough to look after their families, to heat their homes, feed their kids, care for elderly relatives and plan for the future. Too many people in Britain are doing the right thing and doing their bit, helping to build the prosperity on which our country depends, but aren't sharing fairly in the rewards. We can't go on with an economy that works for a few at the top and not for most people," Miliband said.
The rate, paid to every employee and contractor at more than 100 organisations accredited through the Living Wage Foundation, was introduced in 2001. Unlike the lower statutory minimum wage, it is not enforced in law. KPMG, Save the Children and Birmingham City Council have all signed up. Another 47 organisations are awaiting accreditation, the foundation said -- with the Greater London Authority, which calculates the rate for London, only now securing its own accreditation.
The TUC has today welcomed the announcement from the Living Wage Foundation and the Greater London Authority (GLA) that the guideline rate for the living wage is to rise, but warned that too few large employers are paying the new rate, despite having the resources to do so.
TUC General Secretary Designate Frances O'Grady said: 'The rise in the living wage in London and the rest of the UK could be hugely beneficial to low-paid workers across the UK. We commend those employers who have already signed up to it. 'Employers who pay the Living Wage will find it much easier to recruit and retain good staff. The extra pay in the pockets of low-paid workers will also help inject much-needed consumer demand back into our economy.'
A spokesman for Prime Minister David Cameron said, "We back the idea of a living wage and we encourage businesses to take it up. However, he added: "We are not proposing to require it of businesses. Requiring people to pay it would reduce the flexibility businesses have and could ultimately be a bad thing for jobs."
The UK escaped in July-September from its longest double-dip recession since the 1950s, rebounding by 1.0 percent, but faces challenges from the eurozone crisis, tight credit conditions and rising inflation -- as well as a rising income gap.