The Living Wage is central to addressing in-work poverty

Setting a Living Wage target should give government a little more focus, drive and leadership, says Katie Schmuecker in response to the Living Wage Commission report.

Setting a Living Wage target should give government a little more focus, drive and leadership, says Katie Schmuecker.

Set a target for one million more people to be paid the Living Wage by 2020 and come up with a sector-by-sector plan for delivering it. That is the strongest message coming out of the work of the Living Wage Commission, which published its final report today. This conclusion is important for two reasons:

  1. It represents the outcome of 12 months of deliberation by a diverse set of commissioners drawn from business, trades unions, academia and civil society. They agree that there is a powerful social, public finance and business case for paying the Living Wage, and action can and must be taken. Achieving this consensus among people with such disparate interests shows how well established the arguments for a Living Wage have become.
  2. The report is important because while it signs up to the idea that paying the Living Wage should remain voluntary, it doesn’t conclude that government therefore has no role. Indeed the reason the idea of a target is helpful is that it should serve to instil a little more focus, drive and leadership from government should they adopt it. This should extend not only to government’s role as an employer, but to its societal leadership role too. We have seen this in London in recent years, with the current mayor and his predecessor championing the Living Wage in the capital. It is perhaps no surprise then that there are more accredited Living Wage employers in London alone than in the rest of the English regions combined.

There may be some who are disappointed that the report doesn’t conclude business should be compelled to pay the Living Wage. But this seems like the right judgement for now, given that a sudden ratcheting up of wage rates would risk job losses in some sectors, and being out of work carries a much higher risk of poverty than being in low-paid work.

However, while the Living Wage should be a central plank of a strategy to address in-work poverty, there is a need to be clear eyed about what it can achieve. With 44 per cent of people in working poverty living in households where no one is being paid less than the Living Wage, it only provides part (albeit a significant part) of the answer.

Alongside making the case for business to increase wages there is a need to drive up firm productivity to enable more businesses to pay more, and improving the quality of work, so that low-paid jobs offer a stepping stone and not a dead end. That means secure work, with training and opportunities for progression.

Furthermore, after years of stagnant pay, high prices and eroded government support for low-income families, substantial ground needs to be recovered by families to once again achieve a minimum socially acceptable standard of living.

In this context, the role of the tax and benefit system will always be important in ensuring people have enough to make ends meet – but more on that next week when we publish the Minimum Income Standard for 2014.