What Difference does The Living Wage make?
Since the Living Wage was established in London in 2001, the Living Wage Foundation have been gathering information from employers on the impact that introducing the Living Wage has been having on businesses. The Scottish Living Wage Accreditation Initiative is also collating data on the impact of introducing the Living Wage here in Scotland and will report on its findings at the end of its initial period.
They have published three employer case studies so far:
Independently conducted research on employers who have introduced the Living Wage shows:
- A 25% fall in absenteeism
- 80% of employers believe that the Living Wage has enhanced the quality of the work of their staff
- 66% of employers reported a significant impact on recruitment and retention within their organisation
70% of employers felt that the Living Wage had increased consumer awareness of their organisation’s commitment to be an ethical employer
Here’s what employers have told the Living Wage Foundation:
PwC (PricewaterhouseCoopers) found:
Their turnover of contractors fell from 4% to 1% following the adoption of the Living Wage.
Matt Sparkes. Global Head of Corporate Responsibility for Linklaters law firm said:
“It is not just the right thing to do, it makes absolute business sense. It ensures that we attract and retain the best and most motivated people, whether directly employed by us or others. We want good people and the Living Wage is an excellent way of getting and keeping them”.
Marie Sigsworth, Group Corporate Responsibility Director for Aviva said:
“Paying the Living Wage makes absolute sense to us as an organisation – it’s part of our aim of being an employer of change which helps us to protect the long term success of our business”.
Recent research carried out for KPMG showed just how much consumers are beginning to take notice of the Living Wage, particularly here in Scotland:
The figure for the Living Wage is calculated using detailed research on what is needed to cover the basic cost of living in the UK.
Therefore, the Living Wage affords people the opportunity to provide for themselves and their families.
Independently conducted research with employees who work for an employer who has been accredited as paying the Living Wage shows:
- 75% of employees report increases in work quality as a result of receiving the Living Wage.
- 50% of employees felt that the Living Wage had made them more willing to implement changes in their working practices; enabled them to require fewer concessions to effect change; and made them more likely to adopt changes more quickly
Here is what employees have told us:
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Hi, Dionne. What is your role at Milnbank Housing Association?
I’m a Customer Services Assistant. I work at the main reception so I deal with the tenants, owners and other customers that come in, handle phone calls, frank mail, handle enquiries from other staff members in the office and other various tasks round about the office.
What did you do, before you joined Milnbank?
I was at school. When I left school, I came to work here on a 1 year Modern Apprenticeship. After that, I got a permanent contract of employment. Because Milnbank are a community controlled Housing Association, they often go into schools and ask about any pupils that might be interested in working here, so I came in through that Modern Apprentice scheme.
What difference has the Living Wage made to your income?
Well when I first started I was on the lowest salary point, because obviously I was just starting. Getting the Living Wage meant I went up from point 1 to point 4 on the salary scale.
Did you notice a difference then?
Aye, definitely! [laughs]
Since I’ve had the difference I’ve been able to go on holiday. I’ve been able to pay to put a car on the road. So it’s been a big help, definitely.
“The move to the Living Wage has changed my life for the better in more ways than one. Instead of every penny that comes in having to go straight out again, it has given me a little extra to spend on my wife and kids, and that brings joy to my life. It means we can have a proper family life, we can do things together like going to the cinema or a play centre”.
John, Security Guard
“Before, I had to work two jobs to put food on the table and pay the rent. I had no time for my family or my community. When the Living Wage was introduced I was able to prioritise the one job and that means I’ve been able to be there for my family and set up a youth group in my community. What I’ve been given, I’m now able to give back”.
Amin, Cleaner and Youth Worker.
Figures from the Office for National Statistics show that a large majority of people leaving in-work poverty did so following an increase to their hourly rate:
The causes of poverty are complex. In order to improve lives, a package of solutions across policy areas are required. The Living Wage can be part of the solution.
As we can see from the quotes above, paying a Living Wage can afford workers more time to spend with their friends and loved ones, and time to dedicate to their local community. When workers are not worrying about money issues they can focus energy on themselves and those around them. A recent study suggests that poverty directly impeads cognitive abilities, which can lead to poor decision making. Poverty concerns consume mental reserves, leaving less for other tasks.
Paying workers a living wage can also boost the economy, by giving workers more money to spend on goods or services.
These arguments are almost exactly the same as those first made by living wage campaigners in the late 19th and early 20th Centuries. A living wage bill was proposed in the House of Commons in February 1931 by MP for Bridgeton, Glasgow James Maxton. At a time of economic crisis and high unemployment, a living wage, he argued, would allow workers to consume ‘the essential things of life … food, better housing accommodation, better furnishing, equipment inside their home, better illumination of those homes, and better sanitation". This, in turn he argued, would stimulate growth, jobs and prosperity for the whole country: putting money into the pockets of poor people was argued to be a way out of decline. You can read his full speech to Parliament from 1931 here.
"I live with my girlfriend and daughter. Before I got the Living Wage, we were more or less living pay check to pay check. Now we’ve got a little bit extra, we’ve been able to redecorate the house and just generally I think getting the Living Wage has meant we have more security."
- Cameron, Utopia Computers