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UK Raises Living Wage Rate for Workers

The Living Wage Foundation has raised the rate of pay for workers in the U.K. to ensure they earn what’s actually necessary for life in the country.

On Monday, the foundation announced that the U.K. living wage rate would increase 2.4% to 8.45 pounds ($10.34) an hour, in keeping with the higher cost of living, and the London rate jumps 3.7% to 9.75 pounds ($11.93) per hour.

This living wage is a voluntary one—companies aren’t required to pay it. And though it’s quite a bit higher than the government-mandated 7.20 pounds ($8.81) per hour for workers over age 25, many companies are opting to pay it.

Burberry, Fair Trade Foundation and Ikea are among the companies committed to paying what the foundation calls “the real Living Wage.”

“It’s great news that London is leading the way in paying the Living Wage and that over 1,000 businesses are now accredited and helping to make this a fairer and more equal city,” London mayor Sadiq Khan said when announcing the new rate. “I’m glad to say we’re well on track to see it rise to over 10 pounds an hour during my mayoralty [which will end in 2020], but we need to go further and for many more businesses and organizations to sign up.”

The news comes just after a report by U.K. consultancy KPMG released Sunday said more than 5 million of the U.K.’s workers are still being paid less than the voluntary living wage.

“The proportion of employees earning less than the voluntary Living Wage has risen steadily from 19 percent in 2012, when this report began, to 22 percent in 2016, a 1.1 million increase,” KPMG said. “The total number of people earning below the Living Wage today does not differ tremendously from figures published last year, however it is still considerably higher than four years ago.”

According to KPMG, part-time jobs are three times more likely to pay below the previous 8.25 pounds per hour than full-time positions, and roughly 43 percent of part-time workers earn less than the voluntary living wage, compared to 14 percent of full-time workers.

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“Today’s figures show that much more needs to be done if we are to eradicate in-work poverty. The reality is that more than 5 million working people in the U.K. are only earning enough to ‘get by’ and cannot enjoy the standard of life so many of us take for granted,” KPMG senior partner and U.K. chairman Simon Collins said. “Previously many businesses worried that increased wages hit their bottom line, but there is ample evidence to suggest the opposite. By paying the Living Wage we have seen improved staff morale, a rise in service standards, improved retention of staff and increased productivity.”