Finance · 4 min read

Living Wage And Minimum Wage: What Is The Difference?

What Is The Difference Between Living Wage And Minimum Wage?

With the cost of living on the rise, you might be thinking about your wages more than before.

In fact, starting a new job can make it hard to know what salary to expect. We understand the pain.

Luckily, the lowest amount you can be paid is set by the good ol’ UK government. This is where you may have heard the terms “living wage” and “minimum wage”.

While both are in place to ensure workers have a decent income, there are some important distinctions to break down between them. Let’s get into it...

What Is The Minimum Wage?

Whether you’re a worker or not, you’ve probably heard of the National Minimum Wage. This is a legal requirement of pay set by the UK government. The minimum wage sets the lowest pay for workers, so they are not taken advantage of by employers.

The minimum wage earnt per hour varies depending on your age and job status. The government analyses it at the start of April every year. As of April 2023, it is as follows:

  • Apprentice - £5.28
  • Under 18 - £5.28
  • 18 to 20 - £7.49
  • 21 to 22 - £10.18
  • 23 and over - £10.42

How Is The Living Wage Different?

It is important to always make sure you are receiving the minimum wage. As an employee, no matter you’re job, this is the minimum legal amount you should be paid.

However, the living wage is a little different.

An area's cost of living is used to calculate the living wage. This means it takes into account the cost of food, transport and housing. The living wage changes region to region based on varying costs of goods. As a result, in more expensive areas of the UK, it pays workers a higher rate.

However, there are a few important distinctions between living wage and minimum wage.

Firstly, the living wage is not legally binding. Unlike the minimum wage, it is not government legislation so employers can choose if they want to pay it.

Secondly, you are only eligible to receive the living wage if you are over the age of 23.

So, while the living wage can be a good indicator of how much it costs to live in a certain area, employees aren’t always required to pay it.

How Is The Living Wage Calculated?

The Living Wage Foundation (LWF) sets the rate of the living wage in the UK.

All those things you need for a basic standard of living? (no, jaegerbombs don’t count) The LWF analyses all of these factors. It then considers the income necessary to afford all this. They also normally add a little extra for unexpected expenses.

What Is The Impact Of These Wages On Workers?

This may all leave you wondering, why isn’t the minimum wage the same as the living wage? It may seem pretty unfair. But the problem is a lot of companies just can’t afford to raise their salaries as the cost of living rises.

Whilst the minimum wage makes sure all employees are paid equally, the living wage has a different goal. It aims to address the issue of financial well-being.

If you are on minimum pay, try not to worry about your lack of living wages. The minimum wage exists to keep you financially afloat. And, if you need a little help to tide yourself over, there are some simple solutions.

For example, try and master the art of budgeting. If tracking your spending isn't easy for you, don't worry. Some savings accounts and online tools can help you. These online platforms can also suggest side hustles to pick up alongside your job to earn extra income.


The minimum and living wage are slightly different, however, the key takeaway is that they both exist to ensure fair pay to UK workers. If you want to check your own salary, the Gov.UK website is always up-to-date with the latest information.

Want to improve your financial literacy and work towards your savings goals? Get started with Prograd today.

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