New research tracks how Londoners balance rising costs on and below the Living Wage
Living Wage Week is a chance to celebrate progress on fair pay and reflect on what it means for people's lives. The London Living Wage - sometimes called the 'real living wage' - is a voluntary rate calculated annually to reflect the actual cost of living, going beyond the statutory minimum wage to ensure workers can meet everyday needs. The latest London Living Wage rate for 2025-2026 is set at £14.80 per hour. While it is recognised as a vital standard for promoting fair pay, there is still limited evidence on how earning a real living wage shapes employees' day-to-day experiences and wellbeing.
For this reason, between the September and October paydays, we followed the lives of 15 Southwark residents - around half of whom currently earn the London Living Wage or slightly higher, and half of whom earn below - to start to build an evidence base on what earning a real living wage means in practice for Londoners. Through a series of digital diary tasks and reflective interviews, participants shared photos, videos and reflections about how they budget for the month, the choices and trade-offs they make in their spending, and how this impacts how they spend their time, their wellbeing and how connected they feel to life in their local area.
The insights gathered will support Southwark Council and the Living Wage Foundation in encouraging more employers across the borough to accredit as Living Wage employers, and will also help inform wider conversations about addressing low pay in London and how to strengthen financial resilience amongst workers and households. This blog post shares some emerging findings from the research.
Budgeting under pressure
For most participants - including those earning both above and below the London Living Wage - finances were front of mind in their daily calculations. They described planning carefully, stretching income across rent, bills and food, with little left over. Food shopping habits revealed how much thought goes into stretching limited funds as participants compared supermarkets, used loyalty apps and timed their visits to catch deals.
For some, unexpected costs tipped the balance. A child starting a new school or an appliance breaking could derail a month's plans.
It just makes you feel on the edge really… anxious like from day one. Once the salary comes in your mind is working, working like… after all the direct debits, what's going to happen?
Female, lives and works in Southwark
You get to a point where you realise if anything breaks down, you can't replace it unless you buy the cheapest thing - so you have to think about every pound.
Female, lives and works in Southwark
Still, many hoped and managed to save where possible and plan for the future, although their ability to set money aside varied with their income, and whether they earned above or below the London Living Wage. Those earning above the London Living Wage often had a small buffer that allowed for occasional treats, like shopping or holidays, or planning ahead for bigger goals, like buying a car or a home. By contrast, those earning below the London Living Wage often had little to no disposable income after covering essentials, leaving them with limited capacity for future planning and highly exposed when unexpected costs arose.
Household circumstances also mattered. Participants faced different challenges, depending on whether they had children, were single earners, lived at home, or paid rent or a mortgage.
The Limits of Living Locally
Many participants had deep roots in Southwark, with most living in the borough for many years and several born and raised there. This sense of belonging came through strongly in their reflections, with people describing pride in their local area and valuing its diversity and character. Local parks like Burgess Park and Dulwich Park were seen as vital free spaces for relaxation and social connection.
Money, however, also shaped how connected people felt to their local area, with several participants linking financial strain to social withdrawal. Several participants described how low income can make community life harder to access. For many earning below the London Living Wage, the real trade-off was not between spending time locally or elsewhere, but between staying home and going out. They noted that even accessing free spaces in the borough often carried hidden costs, such as travel.
It's like a real problem, because if the library is far away, you have to take the bus to get to the library, you've still got to pay...
Female, lives and works in Southwark
Several participants shared how their income led them to avoid travel or skip social events. A lack of affordable spaces was therefore seen as a big issue.
Being strapped for cash makes you feel isolated and stressed and yeah, disconnected from your community because I think even the cheapest things that you can do and be engaged with your community is still spending money.
Male, lives and works in Southwark
The cost of travel, food or leisure can therefore hinder their ability to connect and lead to social isolation. For many, gym memberships, new shoes or a night out in the pub could put a strain on a monthly budget.
At the same time, participants wanted the council to do more to build everyday connection. During initial briefings with participants, many pointed out the loss of programmes in the borough that supported health and wellness, and provided free activities for children, like swimming lessons.
While flagship community events were appreciated, some participants noted the need for more sustainable spaces for community connection. As one participant put it, "I think Southwark Council put on, you know, festivals. I think there's one free festival in Burgess Park… it's great, but I think really to benefit people, it needs to be kind of … little and often rather than these big, big gestures because they're great, you know, it's great for a day, but you know, then you've got the rest of the year to get through." (Male, Lives and works in Southwark)
Views on the London Living Wage and what employers can do
Most participants were aware of the London Living Wage, but said that participating in the research made them think more deeply about what it means for Londoners in practice. Overall, they felt that being paid fairly was tied to respect and empathy, and being a Living Wage employer helped signal the employer's values. Their thoughts on it were clear.
Every little bit helps…Either pay your employees the London Living Wage or they're not guaranteed to stay.
Male, lives but doesn't work in Southwark
If you want your employees to give you the best of themselves, they shouldn't have to choose between feeding themselves or feeding their children.
Female, lives but doesn't work in Southwark
Beyond wages, participants suggested practical steps to ease pressure which included childcare support and housing schemes, shopping vouchers or discounts, flexible work arrangements, and the previously mentioned free or low-cost community activities.
What emerges from these stories is resilience, with many people making life work in a city that often feels just out of reach. And while the London Living Wage is not the full solution to addressing the cost of living, our research indicates that a real living wage does make a meaningful difference in terms of planning for the future and in reducing money-related stress. Something that participants returned to again and again was that this is not just a conversation about meeting living costs, but it is about fairness, dignity and the feeling that their labour and lives are valued.
