Around 400,000 workers in companies who have voluntarily agreed to pay the Real Living Wage are to receive a salary increase.
Hourly rates will increase by £1 to £10.90 across the UK and by 90p to £11.95 in London, effective immediately.
The Living Wage Foundation brought forward its November rate hike due to the rising cost of living.
But critics say some companies faced with price hikes will struggle to afford it. The national minimum wage is £9.50 an hour for people aged 23 and over.
The cost of living is rising at almost its fastest pace in 40 years, largely due to rising food and fuel costs. Prices in August were 9.9% higher than 12 months ago.
Energy bills, which have been rising rapidly due to high oil and gas prices, will continue to rise in October, although they will be contained by government plans to support households and businesses.
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Katherine Chapman, director of the Living Wage Foundation, said millions will be faced with a ‘heat or eat’ choice this winter.
“Today’s new tariffs will bring greater security and stability to hundreds of thousands of workers and their families during these incredibly difficult times.”
Charles Cotton, senior compensation consultant for the CIPD, the professional body for people and workforce development, described the pay increase as “significant”.
But he said that may not be enough to help some of the lowest-paid workers facing the rising cost of living, and urged employers to look for other ways to support employees.
“Organizations should not only provide enough hours for employees to have a decent standard of living, but also review aspects of employment such as flexible working, opportunities for advancement and financial benefits for well-being, such as work-related sick pay or hardship loans,” he said.
He said some businesses may struggle to afford the new Real Living Wage as they struggle with cost increases themselves.
The number of employers accredited by the Living Wage Foundation has more than doubled to 11,000 in the past two years.
Major new names include the Royal Albert Hall, Aston University and the ExCeL center in London.
They join half of the FTSE 100 companies including Aviva, Everton FC, Ikea, Burberry and Lush, as well as thousands of smaller companies.
There are also now 39 ‘living hour’ employers such as Aviva and the West Bromwich Building Society, which guarantee a minimum of 16 hours of work per week and monthly notice of shift patterns.
Chris Smallwood, owner of Anchor Removals based in Worsley, Manchester, said he became a living wage employer in 2016.
He said: “When I get up in the morning I can look at myself in the mirror and know that all the good things around me are not at other people’s expense because I paid them well,” he said.
“Think of the benefits for individuals, but also for society, when you pay a wage that allows workers to stand on their own two feet.”
Mr Smallwood employs Gavin Ryan, who said when he started working at Anchor Removals 10 years ago he struggled with wages.
“Now I have stability and job security, and the wages have helped me move from my mother’s house to a house with my partner,” he said.
“I can also take care of my daughter and buy her the things she needs. During the pandemic, my partner lost her job as a travel consultant and switched to a supermarket.
“Her hours and pay weren’t great, but since I was earning a living wage with guaranteed hours, I knew I could support her. It was a lifesaver.”
Unison general secretary Christina McAnea said workers on lower wages “are still crying out for help”.
She called on the government to “immediately” introduce an increase in the (mandatory) national minimum wage to ease the burden on those “felt real financial pain”.
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