|A graph of the UK's National Minimum Wage over time. Information taken from The Low Pay Commission - Historical Rates. Low Pay Commission. Retrieved on . (Photo credit: Wikipedia)|
I’m not an economist but it seems to me that we have a great opportunity, here in the UK and across the developed world, to improve the lives of millions of people by simply increasing the minimum wage and actively promoting the payment of a “Living Wage”.
The Living Wage is an hourly rate of pay, calculated according to the basic cost of living in the UK.
It provides an acceptable standard of living for employees and their families and a benchmark for employers who are able to pay more than the National Minimum Wage.
There are two Living Wage rates, the UK Living Wage and the London Living Wage. New Living Wage rates are announced in November each year and published by The Living Wage Foundation - amongst others.
The current minimum wage in the UK is £6.50/hour and the Living Wage (set independently and annually) is £7.85/hour and £9.15/hour in London
I have worked in, evaluated and invested in many companies and right now, I feel that the circumstances could not be better — nor the arguments so cogent — for companies to pay a living wage and for the Government (and the Low Pay Commission) to raise the National Minimum.
We can afford some inflationary pressures:
The spectre of deflation hangs over many economies, although the implications are not fully understood, some rises in the cost of production and services can certainly be passed on to consumers.
Much of the additional wages paid will be re-cycled through the economy by consumer spending, fuelling much needed growth in demand.
With unemployment rates low and employment levels at their highest, there is real competitive advantage to be gained by companies being seen as good payers and attracting the best workers.
Paying a living wage (not just the minimum statutory) can have positive effects on staff wellbeing and team morale.
It can mean increased productivity, reduced absenteeism, better retention and improved quality of work.
Front line staff, like shop assistants for example, are absolutely key to the performance of the business. The recruitment training and retention of these people comes at a huge cost and their motivation, how they feel about their jobs is crucial to the delivery of the brands' promise.
Clearly putting the salaries of all low paid workers up will add to the cost burden of such organisations and this is where the Government’s role in setting minimum wages at a “Living Wage level” is needed to level the ‘playing field’ for companies competing with one another.
The counter argument runs that many companies will be forced to reduce their work forces (or invest in increasing productivity?) — the alternative is of course to raise prices.
With a Conservative government in power, a move to push for further increases in the minimum wage could be seen not as ‘anti-business’ but simply the right thing to do — there are too many in our society who despite having jobs, struggle to get by from day to day.
Most of the readers of this post will be working for companies that already pay a Living Wage — and a rise in the statutory minimum will make no impact. We can however do a lot to influence others.
This is what we can do, today:
1. Ensure that we and our service subcontractors are paying a living wage (eg cleaning companies)
2. Lobby Government to increase the minimum wage and to give a commitment to keep its increases well above inflation, closing the gap on the Living Wage.
3. Use Social media to spread the message @livingwageuk, become accredited to the Living Wage Foundation #LivingWage