How many employers pay their staff the Living Wage?

Published by Kelly Mansfield ,
28 Oct 2014

How many employers pay their staff the Living Wage?

The Living Wage is a subject constantly in the news, and, at least according to the media and social networking sites, it is evident more and more employers are getting on board. As we approach Living Wage Week 2014, we take a look at what the Living Wage is, the benefits, figures relating to the number of employers paying their staff the Living Wage, and the factors that might influence organisations to do so.

Living Wage Week takes place this year from 2-8 November and is recognised as a UK-wide celebration of the Living Wage and Living Wage Employers.

The Living Wage Foundation states that it is a great opportunity to raise awareness of the Living Wage and the Living Wage Employer Mark, while the new UK and London Living Wage rates for 2014-15 will be announced on Monday 3 November.

The UK rate will be announced simultaneously in cities around the UK whilst the London rate will be announced by Mayor of London, Boris Johnson.

Information about the announcement and calculation of the rate can be found here, while The Living Wage Foundation and Principal Partners of the campaign are set to launch a report on the scale of low pay and the impact of the Living Wage.

What is the Living Wage?

  • An hourly rate set independently and updated annually.
  • The Living Wage is calculated according to the basic cost of living in the UK.
  • Employers choose to pay the Living Wage on a voluntary basis.
  • The Living Wage enjoys cross-party support, with public backing from the Prime Minister and the Leader of the Opposition.
  • Paying the Living Wage is good for business, good for the individual and good for society.

A salient point is that employers choose to pay it on a voluntary basis. It is not currently a compulsory measure for employers to have in place and therefore may not be appreciated by all bosses.

However, the second annual State of the Nation Report, which was published and laid before Parliament last week from the Social Mobility and Child Poverty Commission (SMCP), warns that Britain is on the brink of becoming a permanently divided nation and recommends that the UK should commit to becoming a Living Wage nation by 2025 at the latest. With reports such as this in the spotlight, it won’t be long before all employers are asked to consider increasing wages to Living Wage rates.

The UK currently has 912 companies with a Living Wage accreditation, awarded to those who pay their entire workforce the Living Wage, or to those committed to implementing it in the future.

Reluctance to pay?

According to the Living Wage Foundation, the Living Wage is good for business, stating that an independent study examining the business benefits of implementing a Living Wage policy in London found that more than 80% of employers believe that the Living Wage had enhanced the quality of the work of their staff, while absenteeism had fallen by approximately 25%.

Furthermore, its research discovered that two-thirds of employers reported a significant impact on recruitment and retention within their organisation, while 70% of employers felt that the Living Wage had increased consumer awareness of their organisation’s commitment to be an ethical employer.

Above and beyond that, the Foundation notes that it is also good for families. It says:

“The Living Wage affords people the opportunity to provide for themselves and their families. 75% of employees reported increases in work quality as a result of receiving the Living Wage.

“50% of employees felt that the Living Wage had made them more willing to implement changes in their working practices; enabled them to require fewer concessions to effect change; and made them more likely to adopt changes more quickly.”

Nestle showing the way

In June of this year, Nestle became the first UK manufacturer to agree to pay its 800 contractors the Living Wage from 2017, meaning suppliers will earn the same as the 8,000 permanent staff who are already paid it.

In a statement at the time of the announcement, Nestle UK & Ireland Chief Executive, Fiona Kendrick, said the firm was proud of the decision:

"As a major UK employer, we know that this is the right thing to do. Not only does it benefit our employees but also the communities they live and work in.”

Case study

Earlier this month, the Royal Institution of Chartered Surveyors (RICS) published a new report featuring case studies focusing on strategic facilities management, and one of the six studies looked at the Living Wage as a key area for professionalism in facilities management.

Authored by International Workplace, the case study features Guy Stallard, Head of Facilities at KPMG, who discusses the impact paying the Living Wage has had on the business.

The case studies can be found here.

The Living Wage Foundation praises the case study, stating that it supports the work KPMG is currently doing with its Service Providers and specifically those linked to all areas of facilities management. It adds that it now has a growing list of Service Providers from the FM industry engaged in the Foundation’s Recognition Programme.

Will all employers end up paying?

With an abundance of vocal public support and various studies explaining the numerous benefits on offer for employers who pay the Living Wage, it is easy to see why organisations are vowing to cough up. But, what about the businesses that aren’t on board – will anything persuade them to pay the extra money?

Public scrutiny could be the biggest factor to influence companies to increase their pay. Just last week Celtic Football Club came under intense pressure from campaigners, trade unions and politicians to increase the pay of their staff after the Board refused to introduce a Living Wage.

Will the negative media attention pressurise firms into paying? No employer will appreciate being plastered over the internet for failing to pay their staff adequately, and in recent weeks there have been a number of articles castigating firms for not paying employees the Living Wage.

It remains to be seen what impact this will have and of course what impact a Living Wage Week will have on the number of organisations who elect to pay.

If you have any views on this much debated topic, please find us on Twitter and LinkedIn to continue the discussion.