Minimum wage rise comes into effect but call made for more employers to pay Real Living Wage

Real Living Wage employer Nigel Derrett with staff members Summer Scholes (Left) and Sonia Booth (right)

Kane Birch, from Ramsgate, is a multimedia journalism student in the final year of his degree at Canterbury Christ Church University.

Here he looks at the latest rise in the minimum wage rates, what the Real Living Wage is and how those aged 18-20 feel about earning less than those aged 21 and over:

The government’s national living wage increase came into effect on April 1 with the main rate rising from £10.42 to £11.44 an hour. The rate now applies to workers over 21 rather than over 23 as in previous years.

For 18-20-year-olds the minimum wage rises from £7.49 to £8.60 an hour but The Living Wage Foundation says all employees aged 18 and over should receive the Real Living Wage which is set at £12 per hour (£13.15 per hour in London).

University student Harrison Russell (pictured above), from Ramsgate, has welcomed the national wage rise but says those aged 18 to 20 will continue to struggle.

Now 21, Harrison worked at McDonalds between the ages of 18 to 20 while also studying at the University of Kent.

He said: “The national living wage increase was extremely necessary, however it still being under the amount for us to live comfortably is outrageous.

“It isn’t fair for 18-20 year olds to be paid less as they will be in the same roles as those who are 21 and above, and therefore it is pretty shocking they are not entitled to the (same) rise.”

The Real Living Wage

The government increase to the ‘national living wage’ brings it more in line with the ‘real living wage’ but it is still estimated to be £1000 a year less than the ‘real living wage.’ The Living Wage Foundation says this amount could be enough to afford approximately 18 weeks of food for one household, or 12 weeks of housing and energy costs.

At a Real Living Wage rate annual income would be £23,400. The government’s national living wage equates to £22,308 per year but for 18 to 20 year olds the annual wage is as low as £16,770, leaving them some £6,630 short of the ‘real living wage.’

The pay for under 21s is referred to as the ‘minimum wage’ and is calculated based on recommendations from businesses and trade unions instead of being based on the percentage of median earnings like the ‘national living wage’.

The real living wage rate comes from an independent calculation made according to the cost of living, based on a basket of goods and services.

Newington Fish Bar pays the real living wage rate

There are over 14,000 accredited Living Wage employers across the UK who voluntarily pay their staff the higher wage and Newington Fish Bar in Ramsgate  is one of them.

Owner Nigel Derrett said: “When you have a really good team of staff who work well, and work together well, and serve the customers very well, they do need rewarding for the effort.

“When they are paid well and being rewarded, they tend to put more effort into the work, which of course ultimately helps the business.”

Nigel says he does understand why the minimum pay for younger people is set at a lower rate, although he still pays a living wage regardless of age.

He said: “I don’t think it’s ‘unfair,’ because when you are older you have more bills to pay, properties to pay for, rent, gas and electricity and more responsibilities.

“A lot of teenagers unfortunately have to live at home because they can’t afford to leave yet so they don’t have those same responsibilities.

“Having said that, I do have a couple of teenagers who work for me and I do reward them accordingly, which is a lot more than the average minimum wage, because they work very hard and I feel they need to be rewarded.”

One of those staff members is 19-year-old Summer Scholes, who receives the £12ph real living wage as opposed to the £8.60ph minimum wage.

However last year, while working for a different hospitality employer, Summer was receiving minimum wage.

She said: ““Last summer I spent seven days a week on low pay trying to pay my bills, leaving me unable to buy many essentials throughout the month. Being in a job that pays the real Living Wage makes me feel like a valued member of the team.

“I pay rent and bills plus I am also studying, so being paid fairly is really important. My wages also go towards equipment for my college course and I’m saving to go to university.

“ I don’t have any more time to take on extra hours due to my studies, but a lot of my friends are working 5 or 6 shifts a week – while studying – just to be able to get by.

“Most of them are on minimum wage or earning close to minimum wage and they’re really struggling; some only have one day off (per week)..

“I’m grateful to be in the position I’m in now, but it’s really tough for young people on lower wages. When you’re being paid less than your colleagues you feel really undervalued.”

‘Decent standard of life’

For the past 8 years the Resolution Foundation has calculated the Real Living Wage, overseen by the independent Living Wage Commission (LWC), made up of leaders from private, public and third sectors.

Katherine Chapman (Image Living Wage Foundation)

Katherine Chapman, Director of the Living Wage Foundation said: “The rise in the statutory National Living Wage from 1st April is welcome news for the 3.7 million low paid workers across the country, but this still falls short of a wage which takes into account the real cost of living.

“The voluntary real Living Wage allows people in the UK to live a decent standard of life. Over 14,000 employers across the UK are Living Wage accredited and committed to going above the government minimum to ensure their staff are always paid in line with the cost of living.

“Over the last few years of tough economic times, it has been heartening to see so many more businesses join the movement. As well as good for workers and their families, business that pay the real Living Wage report improved staff retention and productivity. We encourage other organisations who can, to make the Living Wage commitment too.”

Find out more about the Living Wage Foundation at: https://www.livingwage.org.uk/

Wage rate comparison table

Wage RateMinimum WageNational Living WageReal Living Wage (Set by the Living Wage Foundation)
Who receives it?Government minimum for adults under 21Government minimum for over 21sThe only wage based on what people need to live
What is it?£8.60£11.44£12 across the UK and £13.15 in London
Who is eligible?18-20 only21 and olderOver 18s
How is it set?Negotiated settlement based on recommendations from businesses and trade unionsA % of median earnings, it aims to reach 66% of median earnings by 2024Independent calculation made according to the cost of living, based on a basket of goods and services
What is it as an annual, full-time salary?£16,770£22,308£23,400 (UK) or £25,642.50 (London)

 

10 Comments

  1. I agree totally that 18-20 year-olds should get the same pay rate as others. They’re old enough to vote, marry and fight for their country, yet they’re still treated as inferiors.

    • Yes if you are part of a team and in the same role as colleagues you work along side same rate of pay shows you are valued .everything in the shops cost the same and some 18-20 year old are living away from home meeting rent commitments.

  2. Make the national living wage a legal requirement and reduce business taxes like corporation tax and business rates for companies to compensate.

    Once you’ve done that then you can remove Universal Credit and Tax Credits for working people which have always existed to subsidise employers who don’t pay a decent rate.

  3. I don’t know if anyone else has bothered to do the calculation, but I’ve just realised that my badic State Pension is just £9,395/year… compared to the £22,300/year figure quotes here for the National Living Wage for over 21s! Pretty amazing difference when people complain that the NLW isn’t high enough.

    • I am guessing most people who retire have paid into a private pension during their working life too as it’s clearly not enough to rely on the state pension alone.

      • Historically, it was only larger employers that offered additional private pensions. Smaller employers did not have the resources to do so.

        Therefore, many older retired folk are reliant on the State Pension alone.

        Even those pensioners that may be in receipt of a small private pension over and above their state pension will then find themselves back in the situation of paying income tax !

    • You make a very valid point.

      The counter-argument is that by the time you reach state pension age, the kids are off your hands, the mortgage is paid, and you have gathered most of your material needs around you. (Those pensioners who are renting will get housing benefit to help with that expense).

    • It would help to increase the personal allowance to around £15K, which would reduce the ‘I’m better off on benefits’ syndrome. And lower VAT, which would put more money into the economy.

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