When is a wage a living wage?
When is a wage a living wage?
In the years following the rise of the industrial revolution the Scottish writer Thomas Carlyle famously wrote ‘A fair day's wages for a fair day's work’, a premise which was duly adopted by various workers' groups as a driver to increase pay and adopt reasonable hours of work whenever they appeared unjust.
Despite its honourable intent, more than 100 years on, and with a labour market far more complex, international and interdependent than that which existed in the nineteenth century, there are still too numerous an example of a ‘day’s wage’ that is anything but ‘fair’.
The UK is the world's sixth largest economy, yet 1 in 5 of the UK population live below our official poverty line, meaning that they experience life as a daily struggle.1 Twenty seven percent of children live in poverty in the UK today.2 Families living in severe poverty often have to choose between heating or eating as they struggle to live on less than £15,000 a year for a household of a couple and two children. 3
I could go on with the statistics but you get the point.
So, the obvious question that springs to mind is ‘What can be done about it?’
I recently attended a day long Ethical Investment Association (EIA) conference (www.ethicalinvestment.org.uk ) in Birmingham, an organisation dear to our heart, and one that Gaeia’s founder, Brigid Benson, was instrumental in setting up many years ago.
During the day, I witnessed an inspiring presentation given by Mike Kelly of the Living Wage Foundation (http://www.livingwage.org.uk ).
Currently the UK Minimum Wage, the lowest hourly wage rate that employers may legally pay to workers, is set at £6.19 for workers aged 21 years and older, and £4.98 per hour for workers aged 18–20.
Although admirable in its intention, the founders of the Living Wage ‘were frustrated that working two minimum wage jobs left no time for family life’. More recent research has found that ‘it has not been set at a high enough rate to stem the rising tide of in-work poverty. 4
The primary principal behind the Living Wage is a simple one, thus:
An acceptable, minimum hourly wage rate is calculated independently and updated annually. Any employer can then choose to adhere to the Living Wage.
By doing so they enjoy the benefits of its accreditation, and agree to pay the Living Wage to all employees directly affected by their business.
It applies to all staff over the age of 18 that work regularly on the employer’s premises and includes directly employed staff, contracted staff and sub-contracted staff, which means that it may apply to contract cleaners, sub-contracted night staff, or graduates on a work placement.
The Living Wage is set at a higher level than the UK Minimum Wage and currently is £8.55 per hour within London, and £7.45 per hour for the rest of the country.
The number of employers adopting it is growing rapidly and includes the likes of KPMG, Lloyds of London, the TUC, Lush, Save the Children, PWC and numerous councils throughout the country.
Not only is it the right thing to do but moreover it is proving to be a business success:
- 80% of employers believe that the Living Wage had enhanced the quality of the work of their staff
- The absenteeism rate for Living Wage employers has fallen by 25% since introducing it
- It has generally resulted in improved retention rates and reduced HR costs
- And 70% of employers feel that the Living Wage has increased consumer awareness of their organisation’s commitment to be an ethical employer 5