The living wage: a fair deal for employers and employees?

Has the Living Wage Commission proposed a reasonable deal for workers and businesses?

The living wage: a fair deal for employers and employees?

There can hardly be more emotive an issue than the national minimum wage. And it was thrown into the spotlight last month as the Archbishop of York, Dr John Sentamu, stated it was a “national scandal” that millions were living in poverty despite being in full-time employment. The Living Wage Commission (LWC), chaired by Sentamu, suggested in its long-awaited report that the government pay its own workers a living wage, which should pave the way for 1 million workers to live within their means by 2020. However, the Commission stopped short of suggesting it be written into law.

With 13 million people living in poverty in the UK and 6.7 million of those coming from a family where someone works, this is clearly an issue that affects many lives as well as the economy. But given that the jump from national minimum wage to a national living wage would represent a 20% hike – and 40% for those living in London – any change in legislation would surely have had a telling impact on many SMEs’ balance sheets.

Now that attention has turned to how organisations go about their business, we ask whether the LWC’s conclusions were a reasonable outcome for both enterprises and their cash-strapped employees.


“It’s time the government stood up for workers”, Jason Stockwood, CEO, Simply Business

The Living Wage Commission’s new report does not go far enough. While the Commission has done valuable work in making the case for a living wage, it has fallen short by failing to back new legislation to make fair pay a legal requirement.

Businesses of every size have a responsibility to pay their staff properly. It is a travesty that, through a combination of low pay and a lack of hours, it is not possible to attain a basic standard of living even when in employment. This is one of the defining issues of our time and both the government and the private sector have a responsibility to tackle it head on.

But fair pay isn’t just a moral obligation – it’s also good business. A fair wage is a sign of respect, and an indication to your staff that you value their work. This is a key tool for maintaining morale and, in turn, boosting productivity. A fairly recompensed workforce will be more likely to remain loyal and hardworking.The government has a responsibility to legislate for fair pay, as time and again the private sector has failed to meet its moral duty on this issue. Just as the argument was won for the National Minimum Wage, so too will the argument soon be won for the living wage. It is time for the government, and for businesses of every size, to stand up for the UK’s workers.

“Improve apprenticeships before improving pay”, Jan Cavelle, founder and director, Jan Cavelle Furniture

I remain puzzled as to why we have a Living Wage Commission and a government-set minimum wage. The mere fact that two exist makes a mockery of both. The government’s minimum wage is adjusted regularly in tandem with the cost of living. The dates in the recommendation are therefore irrelevant. What is relevant is the division between the two as to the level the minimum should be.  

SMEs struggle to employ. The employer’s National Insurance tax has always been a hindrance when providing full employment and yet remains oddly hidden to the majority of the populace, leaving the capitalist employer more exposed to this picture of us ripping off our under-paid staff.  The truth is that while the recession may be waning, businesses all over Britain are struggling for survival and enforced increases in wages can only mean one of two things to many: laying off staff or the end of their businesses.

Then for many, national apprenticeship schemes fail to offer local courses that would allow unskilled young people to learn in the workplace at a lower cost to employers. The only option for all these businesses is to provide their own in-house training and they have to pay considerably more on wages than would another business that was able to tap into the apprenticeship schemes. Once again, many of these businesses who could otherwise provide a future to our young people will be that little less likely to be able to do so. 


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