The Minimum Wage, the National Living Wage and the Living Wage Foundation

Table 3.1

Year REAL

LIVING WAGE

NATIONAL

LIVING WAGE

NATIONAL

MINIMUM WAGE

By April Living Wage (23 and over) 21 to 22 18 to 20 Under 18 Apprentice
2022 £9.90 £8.91 £9.18 £6.83 £4.81 £4.81
2021 £9.50 £8.91 £8.36 £6.56 £4.62 £4.30
To April 2020 Living Wage (25 and over) 21+ /21 to 24** 18 to 20 Under 18 Apprentice
2020 £9.30 £8.72 £8.20 £6.45 £4.55 £4.15
2019 £9.00 £8.21 £7.70 £6.15 £4.35 £3.90
2018 £8.75 £7.83 £7.38 £5.90 £4.20 £3.70
2017 £8.45 £7.50 £7.05 £5.60 £4.05 £3.50
2016 £8.25 £7.20 £6.70 £5.30 £3.87 £3.30
2015 £7.85 n/a £6.70 £5.30 £3.87 £3.30
2014 £7.65 n/a £6.50 £5.13 £3.79 £2.73
2013 £7.45 n/a £6.31 £5.03 £3.72 £2.68
2012 £7.20 n/a £6.19 £4.98 £3.68 £2.65
2011 n/a n/a £6.08 £4.98 £3.68 £2.60
Sources:

·       Real Living Wage – Living Wage Foundation (Nov 2021)

·       National Living Wage and Minimum Wage – Low Pay Commission via Gov.uk (Nov 2021)

*For simplicity, the table shows that these rates are likely to be in place by April  that year, but please note:

·       The Real Living Wage is announced in November and recommended to be implemented within 6 months,

·       The National Living Wage is announced at Autumn Statement but must be implemented in April the following year

·       The National Minimum Wage is announced at Autumn Statement and must be backdated to October the same year.

**The 21-24 age category came into effect in October 2015, once the National Living Wage was introduced for those aged 25+. In April 2021, the age threshold was lowered from 25 to 23 years old.

In April 2016 the government introduced a higher minimum wage rate for all staff over 25 years of age (reduced to over 23 years in 2021) and call this the ‘National Living Wage’. However, the government’s ‘National Living Wage’ is different to the ‘Real Living Wage’ set by the Living Wage Foundation.

The government’s National Living Wage and National Minimum Wage rates are set by the Low Pay Commission. The UK’s Real Living Wage rate is set annually by the Living Wage Foundation and calculated by the Centre for Research in Social Policy at Loughborough University (and is informed by the Minimum Income Standard). The figure is announced every November and employers are advised to implement the new rates within 6 months of the announcement.

The National Living Wage and National Minimum Wage set by government are compulsory for employers while the Real Living Wage is voluntary.  The government rate is based on median earnings while the Living Wage Foundation rate is calculated according to the cost of living.

From April 2022, the Real Living Wage for outside of London is £9.90 per hour. The London Real Living Wage is £11.05 per hour; this figure is set annually by the Greater London Authority and covers all boroughs in Greater London. The National Living Wage for people over 23 is £8.91 per hour. From April 2022 the National Minimum Wage is £9.18 per hour for workers aged 21 to 22.

Leeds hourly wage rates

Table 3.2

Residents Job count Lower 10% Earners Lower 20% Earners Lower 25% Earners Lower 30% Earners Lower 40% Earners Median Earners Top 10% Earners
FTE 306,000 £9.00 £9.78 £10.14 £10.77 £12.00 £13.90 £28.01
Part-time 74,000 £8.56 £8.91 £9.05 £9.22 £9.70 £10.20 x
Full Time 232,000 £9.45 £10.43 £11.15 £11.73 £13.23 £15.45 £29.18
Workers Job count Lower 10% Earners Lower 20% Earners Lower 25% Earners Lower 30% Earners Lower 40% Earners Median Earners Top 10% Earners
FTE 366,000 £9.10 £9.89 £10.32 £10.99 £12.50 £14.04 £28.67
Part-time 89,000 £8.72 £8.96 £9.18 £9.34 £9.89 £10.63 x
Full Time 277,000 £9.52 £10.70 £11.38 £12.16 £13.53 £15.43 £29.26
Source: ONS Annual Survey of Hours and Earnings (ASHE), Nov 2021

x = data was not statistically reliable

The Annual Survey of Hours and Earnings (ASHE) is based on a 1% sample of employee jobs taken from HM Revenue & Customs PAYE records. ASHE does not cover the self-employed or employees not paid during the reference period. The 2021 ASHE data provides earnings data during April 2021. The data splits the job count sample into percentiles which provides insight into the lowest and top earning residents and workers in Leeds. The ONS state that the job count figures are intended to provide a broad idea of the numbers of employee jobs but they should not be considered accurate estimates and caution should be applied when using these numbers. Job count data is based on survey data within a standard variance level of +/-5%. Therefore the same caution should be applied when referencing the estimates for Leeds.

For Leeds residents, the median average full-time equivalent (FTE) wage is £13.90, the median full time wage is £15.45 per hour; the median part time wage is £10.20 per hour. With regards people who work in Leeds (not all of which are resident in Leeds); the median average full-time equivalent wage is £14.04, the median full time wage is £15.43 per hour; the median average part time wage is £10.63 per hour.

People in Leeds earning below the Living Wage Foundation’s Real Living Wage

Table 3.3

2021 (LW = £9.50) 2020 (LW = £9.30) Annual Change
Residents Job count No % Job count No % Job count No %
FTE 306,000 65,908 21.5 339,000 61,593 18.2 -33,000 4,315 3.3
Part-time 74,000 32,683 44.2 96,000 33,024 34.4 -22,000 -341 9.8
Full Time 232,000 33,853 14.6 244,000 26,818 11.0 -12,000 7,035 3.6
Workers Job count No % Job count No % Job count No %
FTE 366,000 73,663 20.1 395,000 68,086 17.2 -29,000 5,577 2.9
Part-time 89,000 35,762 40.2 107,000 35,552 33.2 -18,000 210 7.0
Full-time 277,000 36,620 13.2 288,000 31,326 10.9 -11,000 5,294 2.3
Source: ONS Annual Survey of Hours and Earnings (ASHE), Nov 2021

Estimates for people earning below the Real Living Wage have been calculated using the 2021 Living Wage figure of £9.50 which was in place during the survey period of the latest ASHE data released in 2021. Similarly, estimates for people earning below the Real Living Wage in 2020 have been calculated using the Real Living Wage figure of £9.30 which was in place during the survey period of the ASHE data released in 2020. These estimates have been made using the ASHE survey sample of job counts.  The ONS state that these are intended to provide a broad idea of the numbers of employee jobs but they should not be considered accurate estimates and caution should be applied when using these numbers. Job count data is based on survey data within a standard variance level of +/-5%.  Therefore the same caution should be applied when referencing the estimates for Leeds.

It is estimated that 21.5% of all Leeds working residents earned less than the Real Living Wage in 2021, affecting 65,908 FTE residents. When this figure is broken down, 14.6% of full time working residents (33,853) and 44.2% of part time working residents (32,683) are earning below the Real Living Wage in Leeds. With regards workers in Leeds, 20.1% earn below the real living wage, impacting 73,663 FTE workers. This affects 13.2% (36,620) full time workers and 40.2% (35,762) part-time workers.

 People in Leeds earning below the National Living Wage

Table 3.4

National Living Wage 2021 (£8.72) National Living Wage 2021 (£8.72) Annual Change
Residents Job count No % Job count No % Job count No %
FTE 306,000 30,294 9.9 339,000 33,561 9.9 -33,000 -3,267 0.0
Part-time 74,000 14,800 20.0 96,000 18,865 19.7 -22,000 -4,065 0.3
Full Time 232,000 21,874 9.4 244,000 21,906 9.0 -12,000 -32 0.4
Workers Job count No % Job count No % Job count No %
FTE 366,000 35,836 10 395,000 39,243 9.9 -29,000 -3,407 -0.1
Part-time 89,000 17,701 20 107,000 21,351 20.0 -18,000 -3,650 -0.1
Full-time 277,000 25,925 9 288,000 26,065 9.1 -11,000 -140 -0.3
Source: ONS Annual Survey of Hours and Earnings (ASHE), Nov 2021

The National Living Wage rate is a mandatory minimum wage for employees aged 23 and over. The rate came into place in April 2016 for employees aged 25 and over, and reduced to workers aged 23 and over in 2021. This table provides insight into those working in Leeds being paid less than this. Those likely to be paid less than this rate are under 23 and on the minimum rate relevant to their age group or on an apprenticeship (see table 3.1).

Estimates for people earning below the National Living Wage have been calculated using the 2021 National Living Wage figure of £8.72 which was in place during the survey period of the latest ASHE data released in 2021. Similarly, estimates for people earning below the National Living Wage in 2020 have been calculated using the 2020 National Living Wage figure of £8.72 which was in place during the survey period of the ASHE data released in 2020. These estimates have been made using the ASHE survey sample of job counts.  The ONS state that these are intended to provide a broad idea of the numbers of employee jobs but they should not be considered accurate estimates and caution should be applied when using these numbers. Job count data is based on survey data within a standard variance level of +/-5%. Therefore the same caution should be applied when referencing the estimates for Leeds.

It is estimated that 9.9% of all Leeds residents earned less than the National Living Wage in 2021, affecting 30,294 FTE residents. When this figure is broken down, 9.4% of full time working residents (21,874) and 20% of part time working residents (14,800) are earning below the National Living Wage in Leeds. With regards workers in Leeds, 10% earn below the real living wage, impacting 35,836 FTE workers. This affects 9% (25,925) full time workers and 20% (17,701) part-time workers.

Hourly Wages; Leeds and UK comparisons

Table 3.5

Median  Lower 10% Top 10% Median Annual Change
£ %
Leeds Residential £13.90 £9.00 £28.01 +£0.16 +1.2
Leeds Workplace £14.04 £9.10 £28.67 +£0.29 +2.1
UK £14.10 £9.03 £29.59 +£0.42 +3.1
Source: ONS Annual Survey of Hours and Earnings (ASHE), Nov 2021

Median hourly wages were £13.90/hour for people in work, residing in Leeds compared with £14.04/hour for people working in Leeds (i.e. whether residents or not). Across the UK, the median hourly wage is £14.10/hour. For the lower 10% of earners, residents in Leeds are paid £9.00/hour compared to £9.10/hour for those who work in in Leeds. The top 10% of earners living in Leeds earn over £28.01/hour compared to £28.67/hour for those who work in Leeds.

Median earnings have risen 1.2% on 2020 for resident workers and 2.1% for workers in Leeds. Median wages have increased by 3.1% across the UK.

Weekly Wages; Leeds and UK comparisons

Table 3.6

ASHE Median  Lower 10% Top 10% Median Annual Change
£ %
Leeds Residential £500 £184 £985 +£9.40 +1.9
Leeds Workplace £510 £190 £1045 +£21.50 +4.4
UK £504 £171 £1,054 £25.40 +5.3
Source: ONS Annual Survey of Hours and Earnings (ASHE), Nov 2021

Median weekly earnings were £500 for people in work, residing in Leeds compared with £510 for people working in Leeds (i.e. whether residents or not). The median weekly wage in the UK was £504. For the lower 10% of earners, residents in Leeds are paid £184/week while workers in Leeds are paid £190/week. The top 10% of earners living in Leeds earn over £985/week compared to £1045/week for those who work in Leeds.

Median earnings have risen 1.9% on 2020 for residents and 4.4% for workers in Leeds. Median wages have increased by 5.3% across the UK.

Annual Salaries; Leeds and UK comparisons

Table 3.7

ASHE Median  Lower

10%

Top

10%

Median Annual Change
£ %
Leeds Residential £26,298 £9,385 £51,922 -£72 -0.3
Leeds Workplace £26,679 £10,130 £52,779 +£309 +1.2
UK £25,971 £8,787 £54,742 -£620 -2.3
Source: ONS Annual Survey of Hours and Earnings (ASHE), Nov 2021

Median annual earnings were £26,298 for people in work, residing in Leeds compared with £26,679 for people working in Leeds (i.e. whether residents or not). The median annual salary in the UK was £25,971. Median earnings have fallen by 0.3% on 2020 for residents and risen by 1.2% for workers in Leeds. Median wages have fallen by 2.3% across the UK.

For the lower 10% of earners, residents in Leeds are paid £9,385/year compared to £10,130/year for those who work in in Leeds. For the 10% top earners, residents in Leeds were paid £51,922/year compared to £52,779 for those working in Leeds.

Table 3.8

Total Annual Income Low Average Household Income Median Average Household Income High Average Household Income
England and Wales £20,000 £42,400 £86,100
Leeds £27,400 £39,800 £55,700
Source: ONS Small area model-based income estimates for 2018, Released March 2020

Total annual income is the sum of gross annual income from wages, self-employment, investments, tax credits, pensions, and other benefits and income. Across England and Wales, the mean average household income ranged from £20,000 in low income areas to £86,100 in higher income areas. In Leeds, average household income ranged from £27,400 to £55,700.

Employment Trends

Table 3.9

Year Leeds UK
No % No %
2008 355,800 71.5 28,735,700 72.1
2012 344,000 68.6 28,535,500 70.5
2013 342,700 68.2 28,846,600 71.2
2014 347,400 68.9 29,369,200 72.2
2015 378,500 74.9 30,018,200 73.5
2016 374,200 74.1 30,299,400 73.9
2017 390,800 76.6 30,750,500 74.7
2018 388,900 75.0 30,933,500 75.0
2019 384,800 74.6 31,266,400 75.6
2020 413,900 80.6 31,177,800 75.3
Source: ONS Annual Population Survey, (Jan-Dec 2020),quarterly release, April 2021

Care should be used in interpreting the Leeds data year on year because it is sample based and with at least a 2% confidence interval in each year.

In the year to December 2020, employment in Leeds was estimated at 413,900. This is a rate of 80.6%, and is 5% higher than the national level.

Estimates of people on Zero Hour Contracts

Table 3.10

% on zero hour UK employees on zero hour Leeds employees on zero hour*
2008 0.5% 143,000 1,779
2009 0.6% 189,000 2,072
2010 0.6% 168,000 2,062
2011 0.6% 190,000 2,030
2012 0.8% 252,000 2,752
2013 1.9% 586,000 6,513
2014 2.3% 699,000 7,986
2015 2.5% 804,000 9,468
2016 2.8% 907,000 10,478
2017 2.8% 902,000 10,942
2018 2.6% 844,000 10,111
2019 3.0% 974,000 11,544
2020 3.0% 978,000 12,417
Source: ONS Labour Force Survey, Oct-Dec 2020, Zero Hours Analysis, released February 2021

*Leeds figures are estimated using the national percentage rates on Employment figures from the APS, April 2021

National figures from the Labour Force Survey (LFS) show the number of people who report that they are on a zero-hours contract in their main employment. In Dec 2020, 3% of those surveyed reported being on a zero hour contract.  This equates to 978,000 people in the UK. On the assumption 3% of people in employment are on zero contracts in Leeds, using Employment figures for Leeds of 413,900 (Jan-Dec 2020), it is estimated that 12,417 workers are on zero hour contracts.

Unemployment Trends

Table 3.11

Year Leeds UK
No % No %
2008 24,100 6.3 1,633,300 5.8
2012 37,300 9.8 2,510,700 8.0
2013 35,900 9.5 2,486,200 7.7
2014 33,100 8.7 2,088,100 6.4
2015 23,500 5.8 1,704,700 5.4
2016 16,700 4.3 1,588,200 5.0
2017 18,100 4.4 1,441,100 4.5
2018 13,400 3.3 1,374,600 4.3
2019 16,700 4.2 1,290,300 4.0
2020 17,800 4.1 1,515,400 4.6
Source: ONS Annual Population Survey, (Jan-Dec 2020),quarterly release, April 2021

Unemployment figures have been falling since 2012 in the UK although Leeds saw a slight increase in 2017 it is now reaching pre-recession lows.  Since the recession in 2008, unemployment peaked at 9.8% (37,300 people) in 2012. In Leeds 17,800 people were unemployed in 2020, (a rate of 4.1%) an increase from 16,700 in 2019 (4.2%).

 

Further Information: Living Wage and Minimum Wage Definitions

In April 2016 the government introduced a higher minimum wage rate for all staff over 25 years of age (reduced in April 2021 to staff over 23 years of age) and call this the ‘National Living Wage’. However, the government’s ‘National Living Wage’ is different to the ‘Real Living Wage’ set by the Living Wage Foundation.

The government’s National Minimum Wage rates change every October and is set by the Low Pay Commission. The National Living Wage rates for those over the age of 23 change every April. The UK’s Real Living Wage rate is set annually by the Living Wage Foundation and calculated by the Centre for Research in Social Policy at Loughborough University (and is informed by the Minimum Income Standard). The figure is announced every November and employers are advised to implement the new rates within 6 months of the announcement.

The National Living Wage and National Minimum Wage set by government are compulsory for employers while the Real Living Wage is voluntary.  The government rate is based on median earnings while the Living Wage Foundation rate is calculated according to the cost of living.

Further Information: Zero Hours Contracts

National figures from the Labour Force Survey (LFS) show the number of people who report that they are on a “zero-hours contract” in their main employment. The figures are calculated from responses to the Labour Force Survey (LFS). As part of the survey the LFS asks people in employment if their job has flexible working and if so to choose from a list of employment patterns those which best describe their situation.  Only those people who select “zero hours contract” as an option are included in the analysis. The number of people who are shown as on a zero hours contract will therefore be affected by whether people know they are on a zero hours contract and will be affected by how aware they are of the concept. The increased coverage of zero hours in the latter half of 2013 and are likely to have affected the response to this question.