A company announces that it will pay all staff at least a voluntary 'living wage' benchmark rather than only the legal minimum wage. (In the UK, this voluntary benchmark is different from the statutory 'National Living Wage', which is itself a legal minimum rate.) How does a voluntary living wage differ from a minimum wage?

Correct answer: A) A living wage is based on the income needed to cover a basic but acceptable standard of living, whereas a minimum wage is the legal floor set by law

Explanation

A voluntary living wage is a benchmark calculated from the cost of meeting basic needs, and is typically higher than the statutory minimum. The minimum wage is the legal floor that employers must pay and is set by government, not negotiated employer by employer. In the UK the statutory 'National Living Wage' is a legal minimum rate despite its name, which is why the stem distinguishes it from the voluntary benchmark. Paying a living wage supports social sustainability by reducing in-work poverty.