Election puts the living wage in the spotlight

By Katherine Chapman, Director, Living Wage Foundation.

Since the snap election was announced there has been much talk about minimum wages and living wages. It is great to see such a focus on low pay ─ at a time when over half of people in poverty are in working households and with inflation set to rise, this has never been more important.

At the same time, the debate is growing about the future of work and how the UK must respond to our productivity challenges and create better quality, more productive and fulfilling work.

It is in this environment, that companies are increasingly recognising the social and business benefits of signing up as Living Wage employers. There are now over 3,200 accredited Living Wage employers across the UK who are choosing to pay the Living Wage to their employees and onsite contractors, like cleaners and security staff. This includes nearly a third of the FTSE 100, well-known companies like IKEA, Aviva, Nationwide, KPMG and Chelsea Football Club, as well as local authorities and thousands of small employers.

To be clear, our Living Wage - as opposed to the government’s recently introduced National Living Wage ─ is an independently calculated hourly rate that is based on the cost of living. The rates are currently £8.45 p/h in the UK and £9.75 p/h in London, and apply to everyone over the age of 18. They are based on robust calculations and overseen by the independent Living Wage Commission. Living Wage accreditation is voluntary ─ employers sign up to reflect their values and the Living Wage employer mark has become an ethical badge for responsible pay.

As well as the clear moral imperative, over the past few years there has been a growing body of evidence on the business benefits of paying this voluntary Living Wage. Last month Cardiff Business School published the results of the first ever survey of accredited Living Wage employers exploring their experience and impact in choosing to sign up to the scheme and pay a Living Wage. The results are striking - overall, 93% of accredited Living Wage employers report positive benefits from paying the Living Wage.

The most commonly reported impacts are reputational benefits. Perhaps unsurprisingly doing the right thing on pay builds positive brand value – 86% of Living Wage employers report an enhanced reputation as an employer following accreditation and 64% that it has differentiated their organisation from others in their industry.

The second most commonly reported impacts are HR benefits. Over half of employers report improved recruitment and retention, just under half report better quality of applicants for Living Wage jobs and over a third of Living Wage employers think accreditation has made the organisation more attractive to graduates and higher paid employees.

There are even clearer positive impacts on employee morale and motivation – 63% of Living Wage employers report improved relations between staff and managers and 68% report increased commitment among Living Wage employees. At the same time – and contrary to some perceptions about impact on those higher up the pay scale – 81% of businesses report that there is no negative impact from signing up to the Living Wage in recruiting supervisory positions.

Interestingly, there is also evidence that accreditation has stimulated wider positive change in workforce practices – 45% of employers report that the Living Wage has ‘encouraged positive changes in work organisation’ and 29% that it has ‘raised skills amongst Living Wage employees’. As the researchers describe it – the Living Wage is exerting a benign ‘shock effect’.

Whilst becoming a Living Wage employer is clearly a big decision, it’s also one that has a far wider positive ripple effect than might at first be expected – it generates good will, brand value, strengthens employee engagement and motivation and can lead to wider positive change in the workplace. More broadly, the Living Wage supports working families to have a better quality of life, strengthening communities and local economies across the UK. At a time when this is more important than ever, perhaps it is time for your organisation to consider becoming a Living Wage employer.

For more information: www.livingwage.org.uk
For accreditation enquiries: accreditation@livingwage.org.uk

Thank you for your comments. There may be a short delay in this going live on the blog page as we moderate the comments added to our blogs.