FairPensions blog: Why I support the Living Wage
Jean wrote the following article on the Living Wage in the private sector for FairPensions, the responsible investment campaign group.
I know why I support the Living Wage campaign. In the last ten years, the application of Living Wage standards by certain schools, hospitals, local authorities and the Greater London Authority as well as by private sector companies such as Standard Charter, KPMG and Standard Life has led to stronger staff retention, significant falls in absenteeism and improved workforce morale, whilst lifting over 8,000 families out of working poverty.
Sadly, other employers remain seemingly unconvinced of the benefits of paying the Living Wage. Research and business testimonies show that paying the rate is in the best interests of both employer and employee, yet there are many workers who cannot afford a decent quality of life on what they earn, thousands of whom work in the UK's top private sector companies. In London alone, 470,000 people work in low paid positions, earning less than £7 an hour. In stark contract, the Lloyds Banking Group reported profits of £2.2 billion in recent months.
This is a shameful abdication of social and moral responsibility. As the largest companies on the London Stock Exchange, members of the FTSE100 are in the position to be able to lead by example and have the clout to influence other employers to commit to paying the Living Wage, a move which could potentially lift hundreds of thousands of staff out of working poverty. What's more, unlike some smaller businesses, they can certainly afford to pay it. Research by London Economics concludes that it would cost £2,500 a year to move a full-time worker from the National Minimum Wage to the Living Wage - small change for companies making eight figure profits.
Prompted by FairPension's JustPay! campaign, I jumped at the chance to take my concerns to the very top of British business by writing to all members of the FTSE 100, urging them to commit to paying the Living Wage to all their staff and those of their on-site contractors. Almost three weeks on, a mere 15 companies have responded to my letter, their positions on Living Wage as varied as the nature of their businesses.
By far the most heartening responses were those from Barclays and Prudential, who have committed to paying both the London Living Wage and the national Living Wage for those who live outside the capital. On the flip side of the coin was Lloyds, who explained in no uncertain terms that it is not their intention to become a Living Wage employer despite being 41 per cent state owned. Royal Bank of Scotland provided a similar response, albeit couched in slightly more moderate language. I will continue to monitor pay developments across the FTSE 100 over the coming months.
The business benefits aside, research by the Joseph Rowntree Foundation shows that the implementation of the Living Wage for all private sector workers could boost the nation's coffers by as much as £11.4 billion through higher income tax payments and lower spending on benefits and tax credits. As the UK government continues to use strained public finances as a cover for their draconian spending cuts, this additional pot of money could help restore essential public services, reduce unemployment and provide crucial social protection for the most vulnerable.
Living Wage employers such as Barclays and Prudential are proof that it is possible to be profitable whilst taking an important step towards social responsibility; that it is possible to take decisions which make sound business sense whilst providing decent pay standards and benefits for employees; that it is possible to be a leading business whilst contributing to the financial wellbeing of the nation. Sadly, too many employers have yet to see the light.
Jean's blog was posted on the 24th October 2011 at http://www.fairpensions.org.uk/blog/201110/why-i-support-living-wage
News type: Articles