Living Wage Week – the picture today
The Chancellor, Philip Hammond, delivered his 2018 budget recently and repeatedly declared that ‘austerity was coming to an end’. In addition to changes to apprenticeship contributions, personal tax threshold increases, and the IR35 rollout for medium and large organisations, he has also confirmed an increase in the national living wage (for those aged over 25) from £7.83ph to £8.21ph from April 2019. This will be a five percent increase and benefit around 2.4 million workers. The Government is looking to increase this to £9ph by 2020.
Whilst this is a welcome move, the national living wage is less than the ‘real’ Living Wage, which is voluntary and not fixed by the Government. The real Living Wage is currently £10.55ph in London and £9ph elsewhere in the UK (November 2018 rates). The rate is set by the Living Wage Foundation, an independent organisation that campaigns for people to be paid a fair day’s pay for a hard day’s work, taking account of the real cost of living in today’s world. Council tax, rents, transport and cost of groceries are all considered to devise a pay rate that allows workers to make ends meet.
Recent Office of National Statistics (ONS) stats suggest that the number of jobs failing to pay workers the ‘real’ Living Wage has increased by 300,000 to more than six million, with just over one in five employees in the UK being paid less than they need to meet their living costs. Women are the worst affected group, with 28% of all female workers paid less than the Living Wage.
Where voluntarily paid, the real Living Wage applies to all over 18s and not just to those aged 25 years plus, as in the case of the National Living Wage, thus recognising that people of all ages can face the same living costs. Since being launched, 4,700 employers have voluntarily become accredited to pay the real living Wage to their 180,000 workers. Accredited employers include Ikea, Nestle, Accenture, Oxfam, Nationwide and Heathrow Airport, to name but a few. International Workplace is also one.
The benefits of paying this higher rate far outweigh the increase in payroll costs, as studies from the Living Wage Foundation demonstrate. A survey of more than 800 accredited businesses found that 93% reported they had gained as a business, after becoming a real Living Wage employer.
The research highlighted that paying the real Living Wage did not mean the employer had to automatically pass on the higher wage bill to clients for subcontracted services or make it difficult to win contracts from clients.
It also evidenced that:
- 86% of employers felt their business reputation had been enhanced as a result of the accreditation;
- 64% felt accreditation helped to differentiate them from others in the same industry sector;
- 58% saw an improvement in staff/management relationships;
- 57% saw increased commitment from their staff; and
- 53% saw improved recruitment into their business.
In short, the empirical data would suggest that whilst there is an increase in the initial payroll outlay, the gains in engagement, productivity and commitment to deliver a better service are far greater. This can only be a win-win for everyone involved. Can’t get better than that!
This week is National Living Wage Week. Go to www.livingwage.org.uk/living-wage-week for more details.