The rise of the living wage campaign

Anna Scott

One of the more positive legacies of New Labour was the national minimum wage, introduced in April 1999. Opposed at the time by the Conservative Party and the Confederation of British Industry among others, the policy is now widely lauded for protecting vulnerable workers from potentially unscrupulous employers.

The current government has recently strengthened enforcement for tackling those employers that break the law by not paying their workers the minimum £6.31 per hour, or £4.98 for 18 to 20-year-olds, a move that has been welcomed widely (see www.recruitmentagencynow.com/new-nmw-enforcement-team-applauded-by-recruitment-sector/).

But there is also a voluntary movement gathering momentum that aims to keep wages in line with inflation and enable workers to provide the essentials for their families, necessitating a higher rate of pay than the NMW. This week has been ‘Living Wage Week’, and has marked the increase of the UK living wage rate by 20p, to £7.65 per hour. For Londoners, the level rose by 25p to £8.80 per hour.

Launched by charity and organising group Citizen’s UK in 2001, the voluntary scheme was designed to encourage employers to pay wages that kept in line with rises in the cost of living and keep low-paid workers away from the poverty line. 

The wage rate is set independently each year, outside London by the Centre for Research in Social Policy at Loughborough University and in London by the Greater London Authority’s Living Wage Unit. It is updated annually by calculating a ‘poverty threshold wage’ and adding a 15% margin to ensure that the recipients do not fall to the level of poverty wages.

A wide range of employers has already signed up to the campaign. From public sector organisations to charities, law firms to big name consultancies, the campaign has been successful in a variety of sectors. Recruitment sector companies have also been accredited, including Brewster Pratap and PJB Recruitment.

The last year has seen a huge increase in the number of employers that have pledged to pay their workers the living wage: from 78 to 432.

So it comes as little surprise that the director of the Living Wage Foundation, Rhys Moore has likened living wage accreditation to Fairtrade, and described it as a “must have badge of honour” for organisations.  

It is beginning to gather political momentum too. On the left the scheme has had a great deal of support for some years. The TUC argues that more employers must sign up and the Labour Party has pledged to offer a 12-month tax break to employers that sign up if it wins the next election.

But the right is starting to warm to the campaign too. While the CBI has warned that Labour’s pledge would lead to increase in the price of goods for consumers, there is general support for the scheme among some members of the Conservative Party. Mayor of London Boris Johnson heavily promotes the Living Wage Campaign, there is cross-party support for it in the GLA. There are even rumours that some Tory backbenchers want Prime Minister David Cameron to openly support the scheme.

A voluntary scheme such as this allows the government to avoid the cost of imposing pay rates, makes the Treasury money and sends out the message that it supports fair pay. 

For employers, joining the scheme is not just good PR and “the right thing to do”, but – according to living wage employer Barclays – good business. The bank has found that by ensuring its cleaning contractors pay their employees the living wage, their retention rate has risen to 92%, compared with an industry average of 35%.

Many companies do not have the wealthy coffers Barclays enjoys, and paying a living wage rate would be impossible for them. As the government seeks economic growth – and to reduce legal burden on business – increasing the NMW or enforcing payment of a living wage rate is unthinkable.

But as the campaign’s profile increases, particularly as austerity measures bite and the cost of living continues to rise, employers may see signing up to the campaign as a differentiator for them when it comes to recruitment.

What do you think? Send your comments to editorial@recruitmentagencynow.com.