The rate is calculated using the amount needed to cover the basic costs of living. Research suggests one in five Londoners currently earn less than the recommended living wage rate.
Professor Jane Wills from Queen Mary College, University of London is an expert on the affects of the minimum wage and living wage in London. She talks through the impact of a changing living wage and the benefits to employees and employers alike if staff are paid more highly.
The living wage is not legally enforceable, unlike the national minimum wage. Employers must volunteer to implement it - so far, around a thousand have done so.
Elizabeth Pears from The Voice Newspaper joined discusses this further on Wake Up London.