The “living wage” rate for workers in the UK – the amount judged necessary to provide an adequate standard of living – is to increase by 25p an hour to £7.45 for areas outside London as the drive for better pay is stepped up.
In York, Julia Unwin, chief executive of the Joseph Rowntree Foundation announced the new rate for the UK, outside London. In the capital, it has been set at £8.55.
She also revealed that her organisation would now be paying a living wage to staff who are currently on the lowest salary bands saying: “A living wage is good for business, for the individual and for society.”
The news comes after a report published last week showed that nearly five million workers – one in five – in the UK are paid less than the living wage and that the economic squeeze is hitting these people the hardest.
The living wage compares to the national minimum wage rate of £6.19 an hour.
Also speaking at the York launch event, the Archbishop of York, Dr John Sentamu said: “We will not make this country stronger by impoverishing others.
“I have said before that I see youth unemployment and pay inequality as new social evils that we need to stand together to tackle.
“The fact that poverty pay is allowed to exist in the 21st century is a national disgrace.”
Those in favour of the move argue it gives people more money in their pockets to spend. But last night business leaders warned that cash-strapped small firms across the country were faced with difficult spending decisions.
John Walker, chairman of the Federation of Small Businesses, said: “Small firms want to pay their employees more, and recognise the benefits of doing so.
“However, they are struggling to manage cash flow in the midst of weak economic demand and increasing energy and fuel costs.”
A spokesman for Prime Minister David Cameron said: “We back the idea of a living wage and we encourage businesses to take it up.
“On the whole, those people directly employed by the Government are paid the living wage. It is possible that some people who are employed by contractors to Government departments may not be, but our approach is to encourage those contractors to pay the living wage.
“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.”
In London, the mayor Boris Johnson, announced that InterContinental had become the first hotel chain to sign up to the living wage.
The Mayor said some employers would find it difficult to pay the living wage, which is why he supported the scheme being voluntary.
Labour leader Ed Miliband vowed to address Britain’s “living standards crisis” by delivering a living wage to millions of people in the public and private sector.
Mr Miliband met the leaders of Labour local authorities across the UK who are already implementing the pay structure and promised to find ways to help other businesses become living wage employers.
He said: “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.”
Comment: Page 10.