New research has found that after five years, the National Living Wage (NLW) has significantly boosted income for the low paid, but a large gap remains between the government’s minimum wage for over 23s and a real Living Wage based on the cost of living.

New analysis by the Living Wage Foundation assessing the number of workers on the NLW each year and their working hours has found earners across the UK have collectively received £10bn less than they would have earned on the real Living Wage^1]

Over the five years since the introduction of the National Living Wage, research by Living Wage Foundation finds that a full-time worker in Scotland^[2] on the legal minimum rate has lost out on £8,400, compared to a worker earning the real Living Wage.

Minimum wage legislation has delivered significant pay boosts to low earners. However, despite its name, the National Living Wage continues to fall short of what it costs to live, driving the cumulative £10bn gap to the real Living Wage.

The real Living Wage, the only UK wage rate independently calculated based on the cost of living, stands at £9.50 across Scotland. A full-time worker over the age of 23 and earning the real Living Wage will receive £1,150 more over the coming year compared to a worker earning the minimum wage (NLW). The earnings gap is equivalent to:^[4]

• 11 weeks’ rent for a couple with one child.
• 23 weeks of food costs for a couple with one child.
• 41 weeks of council tax bills for a couple with one child

The real Living Wage is voluntarily paid by over 1900 leading Scottish employers that choose to go beyond the government minimum and provide workers with a wage that meets everyday needs. Over 300 Scottish employers have signed up for Living Wage accreditation since the first lockdown in March 2020.

Peter Kelly, Director of the Poverty Alliance said:

“Thousands of workers in Scotland earning the legal minimum wage rates rely on legislation to secure an essential pay increase each year. Even the highest statutory wage rate – the national living wage of £8.91 will not protect workers from in -work poverty. Decent pay and conditions for workers must be at the heart of our recovery, as we rebuild our economy. More employers across Scotland are recognising the benefits of paying at least the real Living Wage, resulting in a healthier, more motivated and resilient workforce. Our Living Wage Scotland programme seeks to celebrate employers that have committed to paying the real Living Wage as their chosen minimum.”

Two Scottish businesses with real Living Wage accreditation have shared their stories on what paying the real Living Wage means to their staff and to them as a business.

Advanced Clothing Solutions (ACS),

Advanced Clothing Solutions (ACS), based in Eurocentral, North Lanarkshire, has been an accredited real Living Wage employer since March 2020. A fashion rental business that has become Europe’s largest rental and resale fulfilment centre, it employs up to 150 staff de-pending on the season.

Chief Operating Office, Anthony Burns, believes the company’s staff are its biggest asset and said:

“We joined the real Living Wage scheme because we wanted to make our staff feel valued. If all employers did the same thing then maybe we wouldn’t have the same levels of poverty in society. The real Living Wage should be the baseline, the starting point for all good corporate citizens.”

 ACS operative, Arek Postolski, added:

“I now feel very confident when it comes to my day-to-day finances. That is the biggest benefit of being paid the real Living Wage. It gives me stability and peace of mind.”

Parsley Box

Edinburgh based home delivery food service business, Parsley Box, has been paying all staff the real Living Wage or above since early 2020. With a focus on providing cupboard stored food to the over 60s, Parsley Box has seen significant growth during the pandemic and has just floated on AIM.

Co-founder, Adrienne MacAulay has created a company that focuses on making its employees feel valued. She says:

“When potential employees see that Living Wage badge it says a lot about how the company perceives the value of its team.”

Cal Bull-Edwards, Head of Communications at Parsley Box, said: “In terms of staff retention and recruitment it was really important for the employees to know that we were investing in their future. It was very much driven around doing the right thing.”

She offered advice to any employer considering paying the real Living Wage: “The process was seamless, thorough but straightforward and shouldn’t be a deterrent for any business.”

Sorcha Reed, Quality Assurance Assessor at Parsley Box, added:

“It makes us feel valued, it is great motivation and it improves relations between the managers and the staff. It will get the right people to work for you.”

Lynn Anderson, Living Wage Scotland Manager concluded:

“Our growing network of over 1900 Living Wage employers in Scotland includes employers from all sectors and industries. We are incredibly proud of the commitment and resilience that Living Wage employers have demonstrated this past year, and we are further encouraged that more employers continue to seek out Living Wage accreditation as a symbol of their commitment to ensuring staff earn a decent wage.

We hope more employers follow the lead of companies like ACS and Parsley Box, who are going beyond their legal requirements on pay, and choosing to pay at least the real Living Wage to their staff”.