The rebranding of the National Minimum Wage as the Living Wage with an increase to £7.20 per hour for over 25s announced in the budget by the Chancellor, George Osborne, gives no concession to the higher cost of living in London.
Around 1.4 million people in Britain are currently earning the National Minimum Wage of £6.50 an hour. About 3% of the London workforce is being paid at this rate, that’s 125,000 workers.
In giving this legal obligation on employers a new name Mr Osborne is borrowing from a long-standing campaign by the Living Wage Foundation, which has fought for both a UK-wide and a specific London Living Wage for many years. The current recommended London Living Wage is £9.15 per hour. While the Chancellor’s new legal Living Wage doesn’t come close to that it does close the gap that low paid people in London suffer to below £2 for the first time since 2010.
The London Living Wage is calculated by the GLA and championed by the Mayor, Boris Johnson, now a Conservative MP and leadership hopeful. The GLA pays it and 400 employers have signed up. Since 2011, 20,000 workers have benefited from this voluntary scheme. But the GLA estimates that 800,000 workers in London are earning less than the London Living Wage.
Data from the Low Pay Commission shows that the largest number people earning the minimum wage are cleaners, shop workers, restaurant and bar staff. In its report in March this year it says that women, young people, ethnic minorities and people with disabilities are more likely to have minimum wage jobs.
The Chancellor’s new legal minimum may offer some help to these people, but the government is unlikely to want to intervene in the labour market to set costs higher in one part of the country.
Low pay, at minimum wage level and above it, will continue to be a challenge for many in the London workforce coping with the high cost of life in the capital.