Nov
06
2014
Living Wage Week: the benefits of paying a living wage
By Kerry Johnson.
Living Wage Week is running this year from 2-8 November, and to celebrate we’re looking at how the living wage works and how it benefits both employers and employees.
The Living Wage campaign was launched by East London parents back in 2001, as the cost of living had risen so much that the minimum wage just didn’t allow for the basics of life. The Living Wage Foundation has really taken off and is now a registered charity (backed by Ed Miliband and Boris Johnson, among others). It offers official accreditation for employers who agree to pay the living wage.
Benefits for employees
The London living wage is £9.15 per hour – that’s £2.65 more than the National Minimum Wage, which is just £6.50 per hour for those over 21 years of age. With the average cost of rent in outer London now hitting £1,100 per month it’s becoming increasingly difficult for those on low wages to afford to live in even the outer boroughs of London. More and more working adults are being forced into flat shares or are moving back home with their parents as the costs of living continue to rise.
“Over 10,000 London families have been lifted out of working poverty as a direct result of the Living Wage.”
Professor Jane Wills, Queen Mary, University of London
The London living wage is currently calculated by the Greater London Authority, while the wage for the rest of the UK is calculated by the Centre for Research in Social Policy at Loughborough University. The figure is calculated to allow workers to afford basic living costs – a place to live, a healthy diet, social integration and an avoidance of chronic stress.
Benefits for employers
There are now 1,000 accredited Living Wage employers, a massive jump from 400 accredited employers this time last year. Companies include Barclays, NCVO, Deloitte, Amnesty International and – of course – the Centre! So why are so many companies taking the plunge and joining the scheme: what’s in it for them?
The Living Wage Foundation gives the following statistics:
- 66% of employers reported a significant impact on recruitment and retention within their organisation
- 75% of employees reported increases in work quality as a result of receiving the Living Wage
- 25% fall in absenteeism following the introduction of the Living Wage into contracted-out services
- 80% of employers believe that the Living Wage had enhanced the quality of the work from their staff
When we take this into account, the benefits of paying employees a living wage certainly seem to outweigh any costs. But are there any good arguments against raising wages?
Does it always pay to pay the living wage?
In a piece earlier this year, the Guardian asked whether the voluntary sector shares the same responsibility as the private sector when it comes to paying the living wage. While we can all appreciate that budgets are tight for charities, should they be leading by example? Or is there a risk that higher wage bills would lead to more paid jobs becoming volunteer-led positions?
A sobering example of a recent wage dispute can be found in the Ritzy Living Wage campaign. Workers at the Ritzy cinema in Brixton held a series of strikes earlier this year, asking the Picturehouse chain to pay workers the London living wage. Success was reported back in July when it was announced that a pay deal had been agreed – however Picturehouse announced in October that they will be beginning a redundancy programme, with 20 out of a current 93 staff members at the cinema faced with the prospect of losing their jobs.
Updated: following the bad publicity, Picturehouse have announced that staff at the Ritzy will no longer face redundancy.
Obviously companies will need to take a good, hard look at their finances before agreeing to raise wages, but the Living Wage Campaign is gathering increasing support. The Ritzy Living Wage Twitter account gained almost 2,000 followers and the campaign lead to months of negative media coverage for Picturehouse and the Ritzy.
In this case, does the old adage of 'all publicity is good publicity' really apply? Is it better to face a drop in profits than an angry mob on social media? The popularity of these campaigns also suggests that the payment of the living wage might influence customers and clients when choosing who to do business with – something that’s definitely worth bearing in mind.
There are no easy answers to these questions, and no doubt the pros and cons are weighing upon the minds of many company directors right now. But when the benefits of paying the living wage are so high, can companies afford not to?
