Campaigners call for Real Living Wage, but what is it?

The new National Living Wage (NLW) was officially introduced yesterday, increasing the minimum hourly pay for all employees aged over 21 to £12.21 per hour (the National Minimum Wage for under 21s has also increased). 

But many are already urging major retailers to swap out the NLW and pay employees the higher Real Living Wage (RLW) instead. Among them, campaigners are calling on companies like Next, Marks & Spencer, and JD Sports.

What exactly is the Real Living Wage, how is it different from the NLW, and why are campaigners pushing for it now?

What is the Real Living Wage for 2025?

The UK’s Real Living Wage is a voluntary hourly rate that’s calculated to reflect the cost of living, ensuring workers can meet their basic needs without having to rely on government support.

As of April 2025, the RLW is £12.60 per hour (or £13.85 per hour if you’re based in London, to reflect the city’s higher living costs). 

The difference between the National Living Wage and the Real Living Wage is that the NLW is set by the government and is legally enforced. 

In comparison, the RLW is set by the Living Wage Foundation and is completely voluntary.

Why should employers pay the RLW?

Last week, a group of major investors, including Axa, Scottish Widows and Trust for London, began calling for M&S, Next, and JD Sports to offer the Real Living Wage to its employees. The campaign is being led by responsible investment group, ShareAction.

Speaking to The Guardian, ShareAction CEO Catherine Howarth commented: “The UK’s biggest retailers are failing to support their workers with a real living wage, leaving hundreds of thousands of people in the sector struggling to make ends meet,”

“Companies whose workforce can earn less than a real living wage are ultimately harming the vitality and growth of the UK economy, with business models that put pressure on workers, their families and the state by adding to health and welfare costs.”

In low-wage sectors like retail and hospitality, the RLW is naturally beneficial for workers. However, it can also reflect positively on a company’s core values, as it demonstrates a commitment to fairness, employee wellbeing, and social responsibility.

The resolution claims that current pay rates at Next mean that the company isn’t living up to its stated organisational culture where everyone is “treated fairly and with respect”.

For an example of how the RLW can create impact branding, look to Scottish brewery firm BrewDog, which faced criticism last year after dropping its RLW accreditation. 

BrewDog’s then-CEO James Watt claimed it was “necessary” to rebuild the chain’s profitability after a £24m loss. However, staff accused BrewDog of  “abandoning its principles” over the move. 

Employer costs rise this week

Today’s bosses want to reward staff fairly through higher wages. But businesses that do introduce RLW may struggle to sustain it in the long term, especially in industries with tight profit margins. As BrewDog’s controversy proves, introducing RLW only to later withdraw it can damage a company’s reputation more than never offering it at all.

Paying the RLW will be even less feasible for businesses next week, thanks to the rise in employer National Insurance Contributions (NICs), which will come into effect this Sunday 

The tax change has pushed many businesses to reconsider their pay bills and take drastic measures to cut costs, including workplace layoffs. 

Hospitality businesses in particular have struggled with these changes, with only 70% of firms feeling optimistic about growth in the next year; the lowest of any other sector. 

Last November, 200 hospitality bosses warned that the incoming NIC increases would cause “unprecedented damage” and even force some organisations to close completely.

How can I reward staff without raising pay?

With labour shortages still threatening operations at many hospitality businesses, larger restaurant chains are opting to boost their remuneration packages with clever staff benefits, such as discounted meals, cycle-to-work schemes, and referral bonuses. 

If you run a restaurant business and are looking for inspiration, here are some examples of how large employers are rewarding teams without raising pay:

• Gordon Ramsay Restaurants: offers structured training programmes (e.g. chef apprentice programme and wine knowledge training) to progress in the company
• Forza: named the happiest restaurant group to work at in 2024, Forza offers an array of perks for staff, including two mental health days and discounted gym memberships
• Dishoom: offers employees 50% off when dining with friends and family

While the RLW offers better pay, it’s tough for many businesses to take on, especially with rising costs and slim profit margins. And as BrewDog showed, being forced to reel back on RLW accreditation can be damaging to a company’s reputation. 

Increasing wages may not be an option right now, but strategic perks packages can help to keep employees motivated and reduce staff turnover, without costing businesses.