By Jonathan Davies

The UK's "living wage" has been raised by 20p to £7.85.

The wage, determined as the level required for workers to comfortably cover the basic cost of living, has been adopted by more than 1,000 employers which is benefiting 35,000 workers.

The increase means that the living wage is now 21% more than National Minimum Wage (NMW) which was recently raised to £6.50.

Mayor of London Boris Johnson announced that the living wage for London is now £9.15, 35p higher than expected.

Accountancy firm KPMG published a report which suggests that 22% of the working population earn less than the 2013 living wage (£7.65).

It is understood that more than five million people are paid less than the living wage, with women less likely to earn it.

"This research is further proof that more workers are getting stuck in low paid work with little opportunity for progression," said former Labour MP Alan Milburn, the chairman of the Social Mobility and Child Poverty Commission.

Rhys Moore, director of the Living Wage Foundation, said "firms that pay the minimum wage are seeing their workers' pay topped up through the benefits system".

John Allan, National Chairman, Federation of Small Businesses, said:

“The Living Wage is, and should remain an important aspirational goal for firms to strive for.

“More than half (53%) of small businesses already pay the Living Wage or above, are recognising the benefits to their business in terms of staff morale, performance and recruitment, but it should remain a voluntary goal.

“A mandatory Living Wage would pose considerable risks to small businesses in certain sectors, especially retail and health and social care. We want Government to reduce other business costs, which would enable small firms to pass on the savings to their staff in the form of higher wages.”

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