Growing support for the Living Wage now needs to be matched by progress on a low pay strategy
Authors: Kathryn Ray
06 November 2014
The arrival of Living Wage Week 2014 marks a significant improvement in Living Wage coverage. Over 1,000 employers are now Living Wage accredited which is an impressive achievement in just three years since the launch of the Living Wage Foundation. However, the number of employees paid below the Living Wage in 2013 – the latest year of data – has risen to 5.28 million or 22 per cent, according to KPMG research. And while the expansion in business coverage over the last few years has been notable, it remains the case that coverage is primarily confined to large corporations in the financial and legal sectors with relatively small numbers of low paid staff and to charitable and public sector organisations.
With this in mind, panellists at the Fair Day’s Pay event at City Hall on Tuesday night discussed experiences of different tactics for expanding coverage of the living wage. This included local authorities promoting the living wage through procurement practices; e.g. Cllr Andy Hull recounted remarkable achievements in the London Borough of Islington, where almost all local authority subcontractors – including in the home care sector with notoriously low wages – now pay the living wage.
Howard Dawber of the Canary Wharf Group spoke of the company’s ambition to create a living wage zone within the Canary Wharf estate; while good progress has been made with the financial sector, the next major challenge was engaging with retailers in the Canary Wharf shopping district. Retail is one of the largest low-paying sectors and a major retailer is yet to sign up to the Living Wage. A different perspective was provided by trade unionists, with Dave Turnbull of Unite highlighting disquieting employer practices such as hours being cut, differentials reduced, or other elements of reward being withdrawn as a result of contractors being obliged to pay the Living Wage without a corresponding increase in contract values.
The discussion pointed to real issues and challenges that need to be confronted and worked through if coverage of the Living Wage is to achieve a step-change in the years to come. More research is needed to assess the most effective strategies for increasing Living Wage coverage in the coming months. It is clear though, that for take-up to significantly increase, greater leadership and support from Government is now required. All central government departments should move towards Living Wage accreditation and local authorities should be supported to adopt policies for social and community benefit as part of their procurement, in order to encourage wider payment of the Living Wage.
As Fiona Twycross, London Assembly Member who organised the Fair Day’s Pay event argues, the London Mayor could also do more to provide better resourcing for the GLA to engage with businesses around the Living Wage in order to test the opportunities (and limits) of the voluntarist approach. This could also be accompanied by measures to increase business transparency around the Living Wage, e.g. by requiring all publicly-listed companies to make available information on the proportion of their staff paid below the Living Wage. This would allow businesses displaying good practice to better publicise this and provide campaigners with information to better target their efforts and increase awareness amongst the public.
However, the scale of low pay in the UK, and its persistence, demands a more co-ordinated and strategic approach to addressing low pay, in addition to promotion of the Living Wage. Analysis shows that retail, hospitality and social care are the three sectors that would bear the brunt of any compulsory move to the Living Wage due to their heavy reliance on large numbers of low-wage staff. As we have argued previously, low-cost, low-value business models in these sectors must be addressed through a co-ordinated low-pay strategy, with a clear focus on tackling low productivity and improving progression across the low-pay sectors.
Finally, following Equal Pay Day this week, it is also crucial to highlight that low pay is a gender issue. Women are much more likely to be low-paid than men – 27% earn below the Living Wage compared to 16% of men – and particularly so if they work part-time, with 43% of part-time workers below the Living Wage, according to the KPMG research. 2013 was the first time that the gender pay gap had widened in the last five years and recent Fawcett Society research shows that this is linked to low pay – if the NMW was raised to the level of the Living Wage this would reduce the gender pay gap by 0.8%. Tackling this involves better quality flexible and part-time job opportunities in the recruitment market, more accessible progression pathways for part-time workers, and easier movement between full and part-time roles. Addressing the root causes of Britain’s poor record on (persistent) low pay requires more fundamental reform, alongside promotion of the Living Wage. Government committing to reducing the level of low pay would be a good start.
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