The real Living Wage is the only UK wage rate voluntarily paid by thousands of UK businesses that believe their staff deserve to be paid fairly. Yes, paying the real Living Wage is morally the right thing to do for socially responsible organisations, especially during a time of unparalleled financial upheaval, but it also makes smart business sense for employers. Here’s why.
The real Living Wage in a nutshell
The real Living Wage (introduced by the Living Wage Foundation) is the only wage based on actual living costs and has been independently calculated based on what people and their families need to get by – housing, food, clothing, utilities, council tax and childcare together with a basket of household goods. It’s currently £9.50 per hour across the UK apart from London where it’s £10.85, and it’s a voluntary wage currently paid by nearly 7,000 UK businesses. Collectively, these employers have put over £1 billion of extra money into the pockets of low-paid workers across the UK since the Living Wage campaign began.
The real Living Wage isn’t to be confused by the Government’s National Living Wage. The latter was introduced in April 2016 to provide a higher minimum wage for all employees over 25. At a flat rate of £8.72 per hour, it’s not calculated based on real life living costs.
Being a responsible employer
For a socially responsible organisation that’s focused on business as a ‘force for good’, paying the real Living Wage is simply the right thing to do. With nearly three million children in working families living in poverty, up 800,000 since 2010 (TUC, Child Poverty Working Households, 2019), it’s about addressing fundamental inequalities and supporting the most vulnerable in society. The goal must be to eliminate in-work poverty, and achieve a society with reduced inequality.
Organisations that want to operate ethically and value the importance of doing what’s right, need to sign-up to pay the real Living Wage. Failure to do so is at odds with their value system, leading to stakeholder scepticism and disengagement.
Paying the real Living Wage is good for business
Paying the real Living Wage should be driven by a sense of what’s right and fair, but this doesn’t mean compromising business results. In fact, there’s evidence that becoming real Living Wage accredited delivers a number of tangible business benefits, as highlighted in Cardiff Business School’s ‘The Living Wage Employer Experience’ (2017) Report. Here are just some of them:
Enhanced reputation – Becoming an accredited real Living Wage employer enhances the organisation’s reputation. In fact, the Cardiff Business School Report found that 86 per cent of Living Wage organisations believe that Living Wage accreditation had ‘enhanced the organisation’s general reputation as an employer’, improving their employer brand. Others also report that the accreditation has set them apart from other, similar organisations in their industry, creating a clear competitive advantage.
Improved staff engagement – A real Living Wage employer can also expect increased employee engagement because people who are paid fairly and feel looked after are more motivated to perform their best work. The Cardiff Business School Report highlights that more than half of real
Living Wage employers have found that accreditation has ‘improved relations between staff members and managers’ and has increased both motivation and commitment of real Living Wage employees. This is our experience at Rowlinson with one colleague stating, “I have money to spare after paying the bills for a proper night out. I don’t worry about my finances and have paid off my overdraft. People are treated well and therefore work better.” Another colleague highlights the importance of feeling valued and says “I feel very lucky to have been employed by a real living wage company that puts such a strong emphasis on the wellbeing of others. I feel welcomed and respected every day I walk in the door.”
Therefore, paying the real Living Wage is far more than just ensuring people bay their bills every month, it’s a statement to all colleagues that they are cared for, appreciated and respected. This then increases motivation and performance.
Recruitment and retention benefits – Accreditation signals to prospective employees that the organisation has strong morals and values, helping to attract better quality applicants. In fact, over half of employers report that the Living Wage has improved both recruitment and retention with 45 per cent finding that accreditation has improved the quality of applicants for Living Wage jobs. Interestingly, accreditation also makes the organisation more appealing to graduates and higher paid employees, highlighting the positive knock-on effect to the employer brand.
Making the leap
As we live through yet another lockdown with businesses inevitably struggling, it’s easy to hunker down and put pay discussions on the backburner. Yes, it’s vital to cut our cloth during times of financial upheaval, however it’s also important to consider what the impacts of being a real Living Wage employer would be. It’s not simply the moral thing to do, it can also be a game changer. And at a time when we need people to feel motivated and connected to the organisation so that they can deliver their best work, perhaps now is the perfect time to consider becoming Living Wage accredited. It’s an investment, not just into your people, but into the future of the business.
Nicola Ryan is Colleague Support Director at B corp schoolwear manufacturer, Rowlinson Knitwear. Nicola joined Rowlinson in 2008 and was part of the team that transitioned Rowlinson to an employee-owned company in 2015. Nicola is focused on supporting and driving the company’s ambition to be a great company to work for and work with.