Real Living Wage rise takes effect ahead of predicted spike in inflation

More than 300,000 workers are set to receive a pay rise after higher rates were announced for the Real Living Wage, the voluntary rate paid by thousands of employers.

The Living Wage Foundation, which sets the rates, said the new hourly rate would be £11.05 in London and £9.90 outside the capital.

They amount to increases of 20p and 40p respectively as consumers grapple a surge of rising costs, especially for fuel and household energy, which are tipped to be reflected in inflation figures for October due to be released this week.

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The cost of petrol and diesel have hit record highs in recent weeks following a 60% hike in wholesale oil prices this year as economies reopen following widespread COVID-19 disruption.

While the energy price cap was raised by 12% at the start of October following unprecedented rises in gas costs – with there are warnings of worse to come when the cap is next reviewed in early 2022.

Rising prices threaten consumer spending power but the Bank of England opted against an anticipated rise in interest rates to dampen inflation expectations earlier this month.

The Real Living Wage is higher than the statutory National Living Wage of £8.91 an hour for adults, which will rise to £9.50 in April.

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The Foundation said 9,000 employers have now opted to pay the voluntary sum and new signatories included construction firms Taylor Wimpey and Persimmon Homes.

Fujitsu and Capita were also among those to be accredited since the last increase, taking the total since the pandemic started to more than 3,000.

Living Wage Foundation director Katherine Chapman said: “With living costs rising so rapidly, today’s new Living Wage rates will provide hundreds of thousands of workers and their families with greater security and stability.

“For the past 20 years, the Living Wage movement has shaped the debate on low pay, showing what is possible when responsible employers step up and provide a wage that delivers dignity.

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“Despite this, there are still millions trapped in working poverty, struggling to keep their heads above water and these are people working in jobs that kept society going during the pandemic like social care workers and cleaners.”

A government spokesperson said: “The government is determined to make work pay, having recently announced a significant rise in the National Living Wage from April 2022, to £9.50 an hour – the biggest increase since its introduction.

“We have also committed to further increases to the National Living Wage, to reach two thirds of average earnings by 2024.

“The minimum wages are a legal minimum, and we commend employers who are able to pay more, when they can afford to do so.

“We are committed to going even further to support workers, pushing ahead with plans to include a new right for all workers to request a more predictable contract from their employers, giving individuals the security they need.”

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