Real Living Wage UK & London: What You Need To Know [2024 Update]

Tobin Stokes 11 May 2025

Are you truly earning enough to live, not just survive, in the UK, especially in the bustling metropolis of London? The chasm between the government's "national living wage" and the independently calculated "real living wage" is wider than many realize, leaving countless workers struggling to make ends meet.

Understanding the nuances of wage structures in the UK is crucial for both employees and employers. The term "living wage" is often bandied about, but it's essential to distinguish between the government's mandated "national living wage" and the "real living wage," a figure independently calculated based on the actual cost of living. The disparity between these figures can be significant, particularly in a high-cost city like London.

Category	Details
Name	Real Living Wage
Definition	An independently calculated hourly wage based on the actual cost of living in the UK and London.
Calculation Methodology	Calculated by economists at the Resolution Foundation and overseen by the Living Wage Commission.
Purpose	To ensure workers earn enough to meet their basic needs and participate fully in society.
Key Difference from National Living Wage	The Real Living Wage is higher than the government's National Living Wage because it is based on the actual cost of living, while the National Living Wage is a government-mandated minimum wage.
Current UK Rate (Outside London)	12.60 per hour (as of the most recent update)
Current London Rate	13.85 per hour (as of the most recent update)
Frequency of Updates	The rates are typically updated annually in the autumn.
Employer Participation	Employers voluntarily choose to pay the Real Living Wage.
Benefits for Employers	Increased motivation and retention rates for employees. Enhanced company reputation.
Impact on Workers	Improved living standards and reduced financial stress.
Organizations Involved	Living Wage Foundation, Resolution Foundation, Living Wage Commission
Additional Information	More than 140,000 Londoners received a 5.3% pay rise when the London Living Wage increased to 13.85 an hour. Across the rest of the UK, the Real Living Wage rate rose by 5% to 12.60.
Reference Website	Living Wage Foundation

As of April 1st, 2025, the government's "national living wage" stands at 12.21 an hour. While this represents an increase, it still falls significantly short of the real living wage. A worker earning the national living wage would be at least 760 a year worse off than someone earning the real living wage, and a staggering 3,198 less than a worker earning the London living wage.

The London Living Wage, in particular, is designed to provide a standard of living that goes beyond mere survival. It aims to enable workers to actively participate in society, covering the higher costs associated with living in the capital. While the benchmark of 13.85 per hour is a crucial step, it's important to recognize that many Londoners need to earn substantially more to achieve a comfortable and thriving lifestyle.

More than 140,000 Londoners recently benefited from a 5.3% pay increase as the London Living Wage was raised to 13.85 an hour. Across the rest of the UK, the real living wage rate saw a 5% increase, reaching 12.60.

These figures represent a significant boost for low-paid workers, providing them with additional income to cope with rising living costs. The increase equates to an extra 70p per hour in London (a 5.3% increase) and 60p per hour (a 5% increase) in the rest of the UK.

The real living wage is independently calculated using a methodology developed by economists at the Resolution Foundation and overseen by the Living Wage Commission. This ensures that the wage rate accurately reflects the real cost of living, taking into account factors such as housing, food, transportation, and childcare.

The core principle behind the real living wage is that it is based entirely on living costs. This distinguishes it from the national living wage, which is often influenced by political and economic considerations. Because the real living wage is directly tied to the cost of living, it tends to be higher than the minimum wage.

Employers who choose to pay the real living wage are making a voluntary commitment to their employees. This decision can have a profound impact on workers' lives, providing them with greater financial security and a better quality of life. Recent research conducted by the Living Wage Foundation highlights the ongoing struggles faced by many of Britain's 3.7 million low-paid workers, despite easing inflation. A staggering 42% have less than 10 left each week after covering essential expenses, 39% have relied on food banks in the past year, and 32% have skipped meals due to financial constraints.

The real living wage seeks to address these challenges by ensuring that workers receive a fair wage that allows them to meet their basic needs and participate more fully in society. It is a powerful tool for reducing poverty and inequality, and for creating a more just and equitable society.

In contrast, the government's national living wage, while a step in the right direction, often falls short of meeting the actual cost of living. For example, the increase to 12.21 an hour, effective April 1st, 2025, still leaves workers significantly behind the real living wage. A worker earning the national living wage would be 760 a year short of the real living wage and a substantial 3,198 less than the London living wage.

The discrepancies between the national living wage and the real living wage have led to some confusion among employers and employees alike. Many are unsure about what the real living wage is, whether it's statutory, and how it differs from the national living wage. The real living wage is not statutory; instead, it is a voluntary commitment made by employers who believe in paying their workers a fair wage that reflects the actual cost of living.

The increase in the real living wage rates represents a significant boost for low-paid workers. The London Living Wage has risen to 13.85, and the UK wage has increased to 12.60. This translates to an extra 70p per hour in London (a 5.3% increase) and 60p per hour (a 5% increase) in the rest of the UK.

Over 300,000 people working for almost 9,000 real living wage employers throughout the country are poised to receive a vital pay boost as the new living wage rates take effect. This increase will provide much-needed support for workers and their families, helping them to cope with rising living costs and achieve a better standard of living. In the past, living wage rates rose to 9.90 across the UK (a 40p increase) and 11.05 in London (a 20p increase), demonstrating the ongoing commitment to ensuring that workers receive a fair wage.

The living wage rates are unique in that they are independently calculated based on the real cost of living. This ensures that the wage rates accurately reflect the expenses that workers face, allowing them to meet their basic needs and participate more fully in society. The methodology used to calculate the real living wage is transparent and rigorous, ensuring that the rates are fair and accurate.

Employers who choose to pay the real living wage often cite increased motivation and retention rates among their employees as a key benefit. When workers feel valued and fairly compensated, they are more likely to be engaged and productive, leading to improved business outcomes. Paying the real living wage can also enhance a company's reputation, demonstrating its commitment to social responsibility and ethical business practices.

Recent announcements have highlighted the increase in both the UK and London real living wages. These increases reflect the rising cost of living and the need to ensure that workers receive a fair wage that allows them to meet their basic needs. The real living wage is the only UK wage rate that is based on living costs, making it a crucial tool for addressing poverty and inequality.

The Living Wage Foundation champions the real living wage, advocating for its adoption by employers across the UK. The Foundation works to raise awareness of the benefits of paying the real living wage and provides support to employers who are committed to implementing it. The Foundation's efforts have helped to increase the number of real living wage employers, benefiting thousands of workers and their families.

The real cost of living in the UK and London continues to rise, making it increasingly important for workers to receive a fair wage. The real living wage is designed to address this challenge by ensuring that workers earn enough to meet their basic needs and participate fully in society. It is a vital tool for creating a more just and equitable society, where everyone has the opportunity to thrive.

The real living wage includes a range of benefits for both workers and employers. For workers, it provides greater financial security, reduces stress, and allows them to participate more fully in society. For employers, it can lead to increased motivation and retention rates, improved productivity, and a better company reputation.

However, the rise still falls short of the 'real living wage' called for by the Living Wage Foundation, which has campaigned for a pay rate of 13.85 per hour in London and 12.60 per hour for the rest of the country. This highlights the ongoing need for continued advocacy and action to ensure that all workers receive a fair wage that reflects the real cost of living.

In previous years, at least 180,000 people that work for real living wage employers across the country were set for a pay rise as the new living wage rates rose to 9 around the UK, and 10.55 in London. These increases demonstrate the ongoing commitment of real living wage employers to ensuring that their workers receive a fair wage.

The UK rate previously increased by 25p from 8.75 to 9, with the London living wage rising by 35p an hour from 10.20 to 10.55 an hour. These incremental increases, while significant, underscore the continuous need to adjust wage rates to keep pace with the rising cost of living.

These figures, representing increases of 5 and 5.3 per cent from the previous year, with the rates designed to help workers cope with the rising cost of living, exemplify the ongoing efforts to ensure that wages keep pace with inflation and other economic pressures. However, it's crucial to note that even with these increases, some workers still struggle to make ends meet.

This situation won't fully improve until at least April 2024, and even then, the national living wage will still be 1,092 a year short of what a worker on the real living wage would earn, and a staggering 3,334.5 less than a worker on the London living wage. This stark contrast highlights the significant gap between the government's mandated minimum wage and the actual cost of living, particularly in high-cost areas like London.

You can find out more about the government's national living wage rates here, but remember to also consider the real living wage as a crucial benchmark for ensuring a fair and sustainable standard of living for workers across the UK.

It's important to note that any errors in the calculations or information presented remain the sole responsibility of the authors and should be verified with official sources.