Living Wage Week (10–16 November) is the perfect time to revisit what the Real Living Wage really means for small and medium-sized businesses.
Many business owners assume it’s only something big employers can afford. It sounds like an extra cost or a stretch too far. But the truth is, more and more small businesses are discovering it’s achievable, practical and good for business.
What is the Real Living Wage?
The Real Living Wage is the only UK wage rate based on the real cost of living. It’sset by the Living Wage Foundation and reviewed every year to reflect what people actually need to cover everyday essentials such as housing, food and transport.
The new rates for 2025–26 are:
- £13.45 an hour across the UK (up 85p or 6.7%)
- £14.80 an hour in London (up 95p or 6.9%)
These rates apply to all workers aged 18 and above and must be in place for businesses signed up to the Real Living Wage Charter by 1 May 2026 at the latest.
They are higher than the Government’s National Living Wage, which applies to workers aged 21 and over, because they’re independently calculated based on real living costs.
A full-time worker earning the new Real Living Wage will earn £2,418 more per year than someone on the current government minimum; and in London that difference rises to £5,050.
(Source: Living Wage Org, 2025)
Who’s Paying It?
More than 16,000 Living Wage Employers have already signed up to pay a wage “that works for everyone”, covering almost half a million workers who will benefit from the new rates.
That includes half of the FTSE 100, with well-known names like Aviva, Ikea and Burberry, as well as thousands of small and medium-sized businesses. One in seven UK employees now work for an accredited Living Wage employer and that number is still growing.
Myths and Truths About the Real Living Wage
Myth 1: “It’s only for big companies.”
Not true. Almost half of Living Wage accredited employers are small or medium-sized businesses. Many start by applying it to direct employees, then extend it to contractors as they grow.
Myth 2: “We can’t afford it.”
It might seem like a big jump at first, but it often pays for itself. Businesses that pay the Real Living Wage report better retention, fewer absences and higher productivity. Reducing turnover alone can save thousands in recruitment and training costs.
Myth 3: “Our people are already happy.”
They may be, but paying the Real Living Wage goes further. It shows you genuinely value your people, helping to build trust and strengthen your reputation. Employees who feel respected and fairly paid are more engaged and loyal.
Why It Makes Business Sense
Paying the Real Living Wage is about fairness, but it’s also good business practice. It helps you to:
- Attract and keep good people
- Boost morale and performance
- Strengthen your brand as a responsible employer
And, as Katherine Chapman, Executive Director of the Living Wage Foundation, recently said:
“We all need a wage that covers life’s essentials and the Real Living Wage is the only UK wage rate independently calculated based solely on what is needed to cover rising living costs.”
With 4.5 million people still earning less than the Real Living Wage, there’s still work to do but small businesses are playing a big part in driving change.
How to Get Started
Becoming a Real Living Wage employer is more straightforward than you might think. You can find the latest rates and accreditation steps on the Living Wage Foundation website.
If you’re unsure how to make it work for your business, we can help. At Dakota Blue Consulting, we support small businesses to review pay structures, manage change and develop people strategies that fit both your values and your budget.
Want to explore how paying the Real Living Wage could work for your business?
Get in touch with Dakota Blue Consulting today. We’ll help you find a practical, sustainable way to reward your team and build a stronger business.