Boris Johnson, Mayor of London. Pic: Flickr

Councillors in Lewisham and Tower Hamlets reacted cautiously to today’s announcement that the London living wage has increased to £9.15 an hour, saying further reforms were needed if wages are to keep up with the cost of living in the capital.

In a visit to Kaffeine, a West London coffee shop that is the first to be accredited as a living wage payer, London Mayor Boris Johnson described the wage as “a win-win scenario for the workforce and employers alike”.

The living wage differs from the minimum wage, £6.50 per hour for adults over 21, in that it is voluntary. It is supposed to be the minimum amount a worker needs to earn for a decent life.

The national figure of £7.85 is determined by the Centre for Research in Social Policy at Loughborough University whilst London’s is set by the Greater London Authority. 634,000 Londoners still earn less than this figure.

Lewisham Council was the first borough to pay all its workers the living wage, and mandate all its contractors to do the same, in 2008.

Alan Smith, Lewisham’s deputy mayor with responsibility for economic development and social enterprise, said that the increase was good news but added that further steps could be taken: “What we really ought to be looking at is the national minimum wage being raised to the level of the living wage. I don’t think we should have the disparity that we have at the moment.”

This was echoed by Green Party leader Natalie Bennett who said: “Workers are currently experiencing the most sustained and painful squeeze on their wages since the 1860s… The Green Party would not allow this situation to persist. We are calling for the minimum wage to be made a Living Wage today, and for a target to be set of a £10/hour minimum wage, outside of London, by 2020. We are serious about taking the steps necessary to reduce inequality, tackle low pay, and create an economy that supports everyone.”

Tower Hamlet’s deputy mayor and cabinet member for economic development, Oliur Rahman, said that the London living wage “might not be enough” for everyone in a borough with skyrocketing prices.

Like Lewisham, Tower Hamlets ensures all staff are paid the living wage and that all contractors should do the same for their staff. Rahman said: “I hope the government encourages private sectors companies it awards contracts to pay the living wage.”

Over 1,000 employers in the capital have signed up to pay all their staff this minimum wage, with Nestle becoming the first major manufacturer to commit to paying all their staff, including contractors and agency, the living wage in June.

Rhys Murphy, director of the Living Wage Foundation, welcomed the increased participation from firms saying: “The good news is that the number of accredited Living Wage employers has more than doubled this year…Those businesses that can should follow the example of Nestle and Nationwide, as well as hundreds of smaller, independent businesses like CTS Cleaning and Hodgson Sayers Roofing, who pay the Living Wage.”

“Low pay costs the taxpayer money – firms that pay the minimum wage are seeing their workers’ pay topped up through the benefits system. So it’s right that we recognise and celebrate those employers who are voluntarily signing up to the higher Living Wage, and saving the taxpayer money in the process.”

Figures published by KPMG today to mark living wage week said that 5.28 million, 22 per cent of all employees, are living on less than the living wage, including 90 per cent of bar staff and 70 per cent of sales and retail assistants.