The number of UK employers voluntarily paying the higher Living Wage has risen by 19% over the past year, a notable increase amid signs of a softening labour market and growing pressure from statutory wage hikes.
According to new figures released by the Living Wage Foundation, the number of accredited Living Wage employers has reached 16,040 — up from just over 13,400 in the same period last year. These organisations span the private, public and third sectors, including major employers such as IKEA, Aviva, and fashion brand Fred Perry, all committed to paying their employees rates that meet the real cost of living.
The voluntary Living Wage currently stands at £12.60 per hour across the UK and £13.85 in London. This compares to the new statutory National Living Wage of £12.21, introduced in April 2025 for workers aged 21 and over. The London rate for Living Wage employers is therefore more than 13% above the legal minimum, while elsewhere in the UK it is 3.2% higher.
The voluntary rate is calculated each year by the independent Resolution Foundation and overseen by the Living Wage Foundation, with the aim of ensuring wages reflect the actual cost of living, as opposed to political targets or short-term economic conditions.
This increase in accredited employers suggests that, despite tighter margins and a cooling labour market, many businesses continue to see value in offering wages that go beyond statutory obligations. Cardiff Business School conducted a study in partnership with the Living Wage Foundation that found employers reported benefits from accreditation, including reputational gains, improved staff retention, and better overall personnel management.
Katherine Chapman, Director of the Living Wage Foundation, welcomed the figures. “Despite uncertain economic times, the Living Wage movement continues to grow across a range of sectors,” she said. “It shows what’s possible when civil society and business come together to drive up standards and create work that works for everyone.”
Among the 2,830 organisations that became Living Wage Employers in the 12 months to May 2025, nearly two-thirds — 1,751 — were from the private sector. This highlights a continued appetite for fair pay practices, even as businesses contend with economic instability.
The rise in Living Wage adoption contrasts with broader labour trends, which indicate a slackening jobs market. The Office for National Statistics (ONS) reported in May that average pay growth had slowed to 5.6% in the three months to March, down from 5.9% in the preceding quarter. Meanwhile, unemployment edged up to 4.5%, and the number of payrolled employees contracted by 106,000 year-on-year to 30.3 million. Job vacancies also tapered off, dropping by 42,000 to 761,000 — down significantly from their peak of 1.3 million in early 2022 (Source: ONS Labour Market Overview, May 2025).
The government’s 6.7% increase to the statutory National Living Wage in April — part of a series of above-inflation rises in recent years — has sparked concern among some industry groups. For example, the British Retail Consortium has repeatedly cautioned about the cost implications of statutory wage increases, particularly for small and medium-sized enterprises that may struggle to absorb rising payroll expenses.
However, the continued growth in voluntary Living Wage adoption implies that a significant number of employers view fair pay as a strategic investment rather than a cost burden. In a climate where recruitment and retention remain challenging, above-minimum wages may help employers attract talent, particularly in traditionally low-paid sectors such as retail, care, and hospitality.
The Living Wage Foundation estimates that over 460,000 employees have now benefited from the policy since its inception. Advocates argue that the initiative not only improves household incomes but contributes more widely to economic resilience by increasing spending power and reducing in-work poverty.
As inflation eases and economic debate shifts from crisis management to long-term prosperity and fairness, the voluntary Living Wage is being increasingly seen as both a moral and practical choice for forward-thinking employers.
Further reading:
– Office for National Statistics (ONS): UK Labour Market, May 2025 – https://www.ons.gov.uk/releases/uklabourmarketmay2025
– Resolution Foundation’s Low Pay Britain Report 2024 – https://www.resolutionfoundation.org/publications/low-pay-britain-2024
– Living Wage Foundation overview – https://www.livingwage.org.uk
Original article: Living Wage employers rise 19% as more businesses commit to higher pay – Business Matters: https://bmmagazine.co.uk/news/living-wage-employers-rise-19-as-more-businesses-commit-to-higher-pay
