The living wage has risen to £7.65 an hour - £8.80 in London – as it takes account of the higher cost of everyday goods.
But nearly five million people will miss out on it, working for employers that refuse to pay a decent basic wage.
The previous rates were £8.55 in London and £7.45 outside it, showing how quickly life’s basics are going up in price.
The Living Wage Foundation held a launch event to publicise the new figures, and speaker Lacey Green, a bar worker from Faucet Inn, the first pub chain to sign up to the campaign, told those attending how important it was.
She said: “This has made a big difference to me and my 5 year old son Tyler. I can now send Tyler to karate and football after school. We couldn’t afford to do that before.”
A total of 432 employers are now signed up to the campaign, a rise of 78 on last year. This includes big companies like Legal and General, KPMG, Barclays, Oxfam, Pearson, the National Portrait Gallery, First Transpennine Express, as well as many smaller businesses, charities and town halls.
Together they employ over 250,000 workers and also commit to roll out the living wage in their supply chains.
The lower-paid workers in those businesses – 30,000 of them – will now be in line for a pay rise of up to £400 this year as a result of the increase in the rate.
Labour leader Ed Miliband is trying to persuade more companies to join the living wage, and has promised to provide tax breaks for businesses that offer it if his party wins the next election.
He said: "Hundreds of businesses, charities, Labour councils across Britain, and the Citizens UK living wage campaign are already showing how we can make work pay.
"A One Nation Labour government will work with employers in both the public and private sector to tackle low wages.
"Together we can help lift more people out of poverty with decent pay, raise productivity, and control spending on welfare."
UnemployedNet says:
Workless people need jobs more than anything else, but those jobs need to pay enough to support individuals and their families.
The unemployed would better be described as ‘pre-employed’ to reflect the fact that the vast majority are looking for work and most are likely to be successful, and the living wage is vital to ensuring they can afford to take entry-level work.
The government has focused its efforts to ‘make work pay’ on cutting the value of benefits, including the cap on the total a family can receive, below-inflation rises, the bedroom tax and others, but has done nothing to make work itself more viable.
In fact, cutting the value of tax credits, particularly at a time when wages have been losing value against inflation for many years, means it is simply entrenching poverty for all those on low incomes, whether working or not.
The increase in the tax threshold means some no longer have to pay income tax, but the very poorest earn less than this and don’t benefit at all.
Introducing tax breaks for companies paying the living wage is a reasonable step, but far better would be making the living wage compulsory for all UK businesses.
Detaching a group of people from the bottom of the labour market and giving them the choice of either poverty-level work or poverty-level benefits is no way to ensure they are able to live a basic life or to stimulate an economy which needs more money to circulate.