The calculation of a living wage: the UK’s experience

Abstract

Translating the concept of a living wage into a cash figure presents a number of challenges. A recent review of the approaches used in the UK explored these, with the aim of creating a unified and improved calculation. Designing a living wage relies on some technical decisions, such as which data sources are most appropriate. But many of the building blocks underlying a living wage require judgements on societal values, expectations and norms. The living wage rates in the UK are voluntary and promoted by campaign groups; this means any methodology needs to be empirically sound but also recognise the realities facing employers. No perfect approach can exist. But through analysis, consultation with stakeholders and a clear governance structure, the method used in London and the rest of the UK offers a robust, respected and up-to-date way to calculate the income needed to meet a decent standard of living.

The Living Wage in the UK: testing the limits of soft regulation?

“…The methodology focuses solely on the 'basket of goods' approach; the poverty line reference point has been dropped. Crucially, however, acceptable living costs are established through dialogue with workers and families (see D'Arcy and Finch, 2019).…”

Wage Theft and the Struggle over the Working Day in Hospitality Work: A Typology of Unpaid Labour Time

“…For example, Luther was paid £17,000 a year, but often worked 60-hour weeks – commensurate to £5.49 an hour, compared with the £7.20 NLW rate at the time. Similarly, while Sebastián’s (chef, Last Boutique Hotel) annual salary of £28,200 was higher than the average chef salary at the time (£18,640), his 70-hour week translated into an hourly rate of just £7.75, below the recommended London Living Wage of £9.75 per hour in 2015 (D’Arcy and Finch, 2016). These examples are supported by findings from a 2016 members’ survey by the trade union Unite, which found that 44% of chefs worked an average of 48 to 60 hours weekly, while 14% worked over 60 hours (Unite, 2016).…”

What’s in a name? From minimum wages to living wages in Europe

“…There are two living wage rates (one for London and one for the rest of the country), which are determined and regularly adjusted by the Living Wage Foundation, an organisation supported by trade unions and various other social organisations, as well as by some private companies (https://www.livingwage.org.uk). The calculation of living wages is based on a sophisticated methodology that regularly analyses the 'real costs of living' (D'Arcy and Finch, 2019). The current UK living wage rate is about 10 per cent higher than the national minimum wage, while the London rate is nearly 30 per cent higher.…”