Making work pay

Economy
ViewsJune 24th, 2014

Today the Living Wage Commission, of which I am a member, sets out how 1 million more workers in the UK – 50,000 more in Wales – could be paid the Living Wage by 2020. Our report is available here.

Wales has one of the highest proportions of people currently paid at less than the Living Wage – about 23% of all workers – and  has one of the lowest numbers of employers paying the Living Wage.  Major Welsh employers such as the NHS, local authorities, large retailers and finance institutions are conspicuous by their absence from the Living Wage Foundation‘s list of accredited organisations. There are just 21 organisations in Wales on their list – a sliver of the UK total.

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At £7.65 an hour no-one on the Living Wage would be well-off.

The Living Wage is calculated to pay enough for a full-time worker to maintain a basic, but socially-acceptable, lifestyle – not just to be able to afford to eat healthily and heat their home, but to do ‘ordinary’ things like give a modest birthday present to a family member.  Someone working a 37 hour week would earn £283 a week or £14,700 a year gross.

The benefits of more people being paid a Living Wage are huge.

  • It’s good for workers.

Being paid that little bit more is good for workers – that little bit extra cash greatly eases the financial pressures faced by low income families, ending the stress and worry many face and allowing them to spend more time with their families.

  • It’s good for business

There’s a lot of evidence that paying the Living Wage makes business sense – in particular it can increase productivity as workers are incentivised and employers encouraged to get more out of their workforce. It also reduces labour turn-over, saving on recruitment and training costs.

  • It’s good for the economy

Paying the Living Wage takes a lot of workers off in-work benefits like Housing Benefit, saving millions, and also puts money into the economy as low-paid workers tend to spend increases in income on goods and services in the UK rather than saving it or spending it abroad.

How to achieve 1 million workers on the Living Wage

Encouraging employers to do something voluntarily isn’t going to be easy. The Living Wage Commission’s recommendations are about a mixture of leadership, support and recognition for employers who do pay the Living Wage.  Ultimately it’s the business case alone that will persuade employers to pay a bit more – some of the big retailers already recognise that they need to pay more than the minimum (even if not quite the Living Wage rate).

We understand that not all employers can afford to pay the Living Wage and we have no wish to see workers lose their jobs or businesses go to the wall because of their wage bills.  That’s why it’s important that the Living Wage is, and remains, voluntary.  We also understand that a decent job is about much more than the headline rate of pay – security,  sick-pay and stability of hours worked all matter a great deal too and ideally should sit alongside the Living Wage in an overall package.

But while it might not be perfect, the Living Wage is better than the alternative – work that doesn’t pay enough to live on, wages that have to be topped up by the Government simply so people can have a roof over the heads, and a constantly churning workforce of unmotivated people.

Fifty thousand on decent pay is in fact a modest ask – it would still leave about 200,000 people on less than £7.65 an hour – but it’s achievable and, above all, fair.

Victoria Winckler is Director of the Bevan Foundation and is a member of the Living Wage Commission.
Please support the work of the Bevan Foundation to make Wales a fairer place by making a donation or joining us. 

 

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