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Rise in living wage and Labour’s proposals

26th November, 2012

Boris Johnson, mayor of London, has announced that the living wage (assessed by the rates of living costs) has risen this year by 25p, from £7.20 to £7.45 and to £8.55 for those in London. By comparison, the legal minimum wage is currently £6.19 for those aged 21 and over. Mr Johnson said “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.”

Ed Miliband gave a speech at Islington Council in London this week and has unveiled Labour’s plans relating to the living wage should it win the next election. He said they are focused on combating the “living standards crisis” in Britain. Labour is hoping that the living wage can become commonplace for millions, and that listed companies can be “named and shamed” and not awarded government contracts if they do not comply. Mr Miliband commented “just as in the 1990s, the minimum wage was a signature achievement of the last Labour government. So in the coming years, the living wage will be central to our work. We need to build an economy where everyone has a stake. Not where millions of people feel they never have a chance for a decent life however hard they work.” Although the coalition government says that it supports such a move, it fears that making the living wage mandatory could breach European Union Law.

The Institute for Fiscal Studies estimates that if everyone were to be paid the living wage, the Treasury would save £1,000 a year for every person as a result of less spending on tax credits and from increased tax revenue. However, opinion seems to be divided as the Institute of Economic Affairs has said that the proposals for a living wage may “do more harm than good”.

It is reported that over 100 organisations from every sector are now paying their employees a living wage. These include KPMG, Save the Children, Birmingham City Council, Barclays, and Angus Council this week became the first local authority to guarantee its employees an hourly rate of pay equivalent to the living wage. Whether other government bodies will follow suit remains to be seen. Please visit the following link to find out more about the living wage: http://www.livingwage.org.uk/

For further information relating to the living wage, please contact Helen Watson by sending an e-mail to [email protected] or on 01244 405565.

 

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