Paying the Living Wage is just the start when it comes to providing ‘good jobs’

In the face of the squeeze on living standards and a freeze on in-work benefits, there is good news as 3,600 employers (including a third of the FTSE100) now pay the Living Wage.

That’s the higher, voluntary rate of £10.20 in London and £8.75 per hour in the rest of the UK, based on what it really costs to live in the UK in 2017. That’s 150,000 employees who are being paid more, easing tight household budgets and contributing more to the wider economy.

But new research from KPMG highlights the one in five people (5.5 million) in the UK that still earn less than the Living Wage in 2017. Addressing these low levels of pay is a core part of how the UK needs to solve in-work poverty. The social case is clear, but how about the business case?

Benefits for employers

  • Employers who pay the Living Wage have increased motivation in their workforce, whilst decreasing staff turnover, sickness and absenteeism.
  • Evidence shows that financial worries impact on performance at work.
  • It’s not just the big corporates, public sector employers and household names that pay the Living Wage. Hundreds of small businesses up and down the UK pay their staff the Living Wage and can celebrate their accreditation with staff members and customers.
  • Social media this week gives example after example of employers and employees highlighting the difference the Living Wage is making to business.
  • The Living Wage logo is seen in shop windows and on delivery lorries. For some businesses, being a Living Wage employer is a core part of brand identity and business mission.

There are additional drivers to encourage businesses to become Living Wage employers. Across the UK, mayors and others are looking at how good jobs can be recognised and encouraged in their areas. The mayors of both London and Manchester are consulting on new schemes which could include Living Wage accreditation. In Scotland, the Scottish Business Pledge requires businesses to pay the Living Wage. Some local authorities like Brent are giving discounts on business rates to Living Wage employers. Living Wage service providers have committed to providing Living Wage bids alongside market rate bids to clients.

Going beyond the Living Wage

Whilst a focus on the Living Wage is important, and to be celebrated this Living Wage Week, there are a range of positive steps which employers can take to improve jobs – especially in sectors which are traditionally lower paid.

  • Employees who want part-time hours (often to balance caring responsibilities with work) need to be able to apply for promotions to boost their income but enable them to keep their part-time working.
  • Timewise have been working with major retailers and the British Retail Consortium on a Retail Pioneers programme to make part-time promotion easier through better job design of store management roles.
  • Many employers offer fringe benefit schemes, like providing discounts off the weekly shop or healthcare costs. JRF are supporting the Work Foundation to work with employers and the employee benefits sector on how to improve these schemes so they can make more of a difference to low-income households.
  • Many low- paid workers need more hours so that - often when combined with in-work benefits - they are able to meet their household costs. Employers need to understand more about who in their existing workforce would like more hours and whether this can be accommodated.
  • Good jobs also mean greater job security and control over hours. The UK lags behind its competitors on investment in training, and low-paid employees are less likely to receive training. Good employers invest in and develop their staff at all levels.
  • The Apprenticeship Levy is a good opportunity to support both the development of better-quality apprenticeships and innovative in-work progression routes.
  • New research from the CIPD has some really promising findings on how to support SMEs with HR capability and high-performance working.

There are many vanguard employers leading the way (despite being in low-margin industries), like those who pay the Living Wage and those who invest heavily in high-quality, continuous training. We need to work towards good-quality jobs being the norm rather than the exception in lower-paid sectors such as care, retail, facilities and hospitality. Perhaps we are at the tipping point where the public and policy makers need to expect and demand this from all businesses?

Find out more about Living Wage accreditation.