In an effort to protect employees and provide fair pay for a fair day’s work, the UK this week has made significant progress by increasing the living wage rate in London and across the country. This increase coincides with Living Wage Week (5 – 11 November), which is recognised notably in the UK, Canada and New Zealand and is gaining traction in other regions.
The Living Wage is a voluntary rate, calculated using actual living costs and is higher than the minimum wage. Many people are suffering from in-work poverty, meaning that the wages they receive still leave them struggling to make ends meet. In the UK, the scheme recommends a wage of £8.75 per hour and £10.20 in London, where living costs are higher. This has been adopted by more than 3,500 employers who pledge to pay the rate to all members of staff, including contractors.
New Zealand also saw a landmark progress this week with Vector Ltd, the largest distributor of electricity and gas to Auckland, becoming the first corporate business to be accredited as a living wage employer. It joins nearly 90 other accredited businesses committed to paying a fair wage of at least $20.20.
Last year, the introduction of the ‘National Living Wage’ by the UK government caused controversy among businesses. Not to be confused with the ‘Living Wage’, the government rate is the legal minimum wage paid to over 25 year olds (with a lower rate paid to over 18s). Some businesses claimed that this increased wage would cause a burden to their finances, leading them to seek labour cost reductions elsewhere, such as reducing overtime pay. Concerns such as these were mirrored in our 2016 FM Survey, where respondents reported budget concerns due to this policy.
However, the British Institute of Facilities Management has thrown its full support behind the Living Wage, becoming actively involved in collecting evidence of the effects of wage increases across the FM industry and supporting BIFM members to sign up to the scheme.
Employers who have engaged the higher voluntary rate have reported great benefits. 93% say paying a Living Wage has benefited their business and 75% say that it has increased employee motivation and retention rates. There has been much discussion in FM about the value of the workplace comfort and its suitability for driving productivity, but it’s becoming apparent that investment must also be made in employees’ quality of life outside of their jobs. Monetary struggles can account for stress, lack of concentration and exhaustion, in particular for those doing more than one job or who cannot afford to eat or heat their homes sufficiently.
Therefore while pay rises will affect the bottom line, profits will also be affected in the wake of poor productivity, and business’, especially large corporations, who have a social responsibility to support those who work for them.
Living Wage Foundation Director, Katherine Chapman concludes that: “Great businesses know that, even during these tough times, not only is fair pay the right thing to do but paying the real Living Wage brings big benefits. Nine out of 10 accredited Living Wage employers report real benefits including improved retention, reputation, recruitment and staff motivation.”