The Difference Between the Living and Minimum Wage
The government are steadily increasing the national minimum wage to reach £9.00 per hour by 2020. Rarely do discussions about the national minimum wage fail to prompt debates about how it compares with what is commonly known as the ‘Living Wage’. In this blog we will discuss the difference between the living and minimum wage.
It has been widely suggested that employees are more productive if they have a higher wage. However a recent study conducted by D.Gilchrist, M.Luca and D.Malhotra showed that there was no correlation between wage and increased performance. Their study suggested that employees did not work harder than their colleagues if they remained unaware of their differing wages. It is important therefore for employees are paid what is fair as a basic; not what employers can get away with.
The table below details the current (October, 2016) UK minimum wage in comparison to the suggested living wage:
| Minimum Wage | Living Wage | National Living Wage | London's Living Wage | |
|---|---|---|---|---|
| Under 18 | £4.00 | £8.25 | £7.20 | £9.40 |
| 18 to 20 | £5.55 | £8.25 | £7.20 | £9.40 |
| 21 to 24 | £6.95 | £8.25 | £7.20 | £9.40 |
| 25 and over | £7.20 | £8.25 | £7.20 | £9.40 |
The Difference
- Minimum wage is a legally enforceable minimum level of pay, whereas Living wage is the suggested rate of pay.
- The minimum wage is based on what the market can bear. The living wage is based on the cost of living.
- The national minimum wage is declared by the Business Secretary annually. It is based on the idea that an individual’s wage needs to reflect what is necessary for workers to lead a decent life.
What counts as work?
- At work working.
- On standby near the workplace.
- Not working due to machine breakdown or such scenario but kept at the work place.
- Travelling in connection with work including to and from one work task to another.
- Training.
What does not count?
- Travelling to and from work.
- Rest breaks and lunch breaks.
- Holidays.
- Sick leave.
- Maternity leave.
- Being in the workplace without working.
Being paid below the suggested living wage is an unfortunate reality for a great deal of people throughout the UK. However every employer is absolutely and unequivocally within their rights to do this. Being paid under the minimum wage is however illegal.
