So the Living Wage folks yesterday told us that for 2015 the Living Wage (outside of London) is £7.85/hour.
Running the numbers and comparing them to the National Minimum Wage (NMW) of £6.50/hour we get the following:
|Gross Pay (£)||12,675.00||15,307.50|
|Income Tax (£)||535.00||1,061.50|
|Employee’s National Insurance (£)||566.28||882.18|
|Employer’s National Insurance (£)||651.22||1014.51|
|Nett Pay (£)||11,573.72||13,363.82|
The difference between the Nett LW and the Gross NMW is £688.82 per annum. Over a year (52 x 37.5 hour weeks = 1950 hours) that is an extra 35p per hour – or £1 less than the LW.
Raise the NMW wage to £6.85/hour, the starting rates of Income Tax and National Insurance to £12,675 and, hey presto, we have the so-called Living Wage.