The living wage: the right thing for business
The Living Wage Foundation argues that it makes good business sense to pay your staff enough to maintain a dignified standard of living
Hodgson Sayers, a Living Wage Employer, has just been listed as one of the Financial Times 1,000 Fastest Growing Companies in Europe.
It’s perhaps not surprising that companies such as Hodgson Sayers and many more of the 3,200 Living Wage Employers across the UK have seen success on the back of signing up to become accredited by the Living Wage Foundation. New research from Cardiff Business School based on a survey of the Living Wage Employer network found that 93 per cent of Living Wage Employers report positive effects from accreditation, most commonly enhanced reputation, improved retention, recruitment and productivity.
Being an accredited Living Wage Employer means paying all staff, including onsite contractors like cleaners, a wage that’s based on the cost of living.
Well paid staff stay
Hodgson Sayers finance manager Mike Wade told the Living Wage Foundation that paying the living wage is important to their success and a mark of their commitment to employees. “Embracing the living wage was a very important milestone for us. There were the obvious business benefits such as that well paid staff are motivated and more productive. Retention of staff significantly reduces training and recruitment advertising costs. Long-serving employees create strong teams.
“Uppermost in our minds was the fact that embracing the living wage was simply the right thing to do. It chimed perfectly with our core values that guide all our transactions – honesty, decency and integrity. We don’t want people coming to work and worrying about whether they have enough money to get them through the week. The wellbeing of our staff is as important to us as it is to them. We have a responsibility, a duty of care.”
The concept of a “living wage” – that people should be able to earn a wage sufficient to maintain a dignified standard of living – has gained increasing prominence in recent years, perhaps most notably influencing the introduction in 2016 of the National Living Wage for over-25s – although this is an entirely separate minimum wage rate that’s based on median earnings, not living costs.
Businesses are taking action
Since 2015, the number of employers signing up with the Living Wage Foundation has more than doubled. As companies wrestle with how to create better quality, more productive and fulfilling jobs, ever more of them are recognising the social and business benefits of going further on pay than what’s legally required. This includes nearly a third of FTSE 100 companies, well-known brands such as IKEA, Aviva, ITV and Chelsea Football Club as well as thousands of small and family-owned businesses. The Living Wage Employer mark has become an ethical badge for responsible pay.
Embracing the living wage was a very important milestone for us. There were the obvious business benefits
Paying the living wage is not always a simple task: some businesses tell us that it has been a long-term goal and an indicator of success, others view it as a basic element of the viability of their business model. But for all, it reflects their values as an employer.
Aviva has paid the London Living Wage since 2005. Aviva Group Property and Facilities director Stuart Wright was appointed chair of the Living Wage Foundation advisory council in 2016. He says, “We made the commitment to pay the real living wage because it’s the right thing to do, and because it’s also good business. We want to be a great place to work – an employer of choice. By paying a fair wage we will attract and keep the best people, helping to protect the long-term success of our business. What’s more, paying the real living wage has an important impact on people’s quality of life.”
What goes around…
The ripple effects can be far-reaching. Wade says, “The money we pay our staff will mainly be spent within the local community, supporting shops, cafes, leisure outlets, garages and restaurants. We see this as a real benefit of accreditation. We believe that contented staff help build great companies and positive communities - and that links perfectly with our core values.”
While the debate about the statutory minimum wage continues, yet more than half of those in poverty come from working households, they those companies that already go further as accredited Living Wage Employers know it’s the right thing to do - and it makes good business sense, too.