Why pay the real living wage?

As a social enterprise that is committed to supporting the vulnerable adults whom we employ, it might not come as surprise that we pay the real living wage and we’re currently in the process of being an accredited employer. But did you know the likes of Nestle, Unilever and Ikea have also committed to paying their employees a minimum of £9? We think it’s really important to pay the living wage for many reasons; however it’s important to explain what it actually is.

As you might be aware in 2016, George Osborne established a national living wage which is the minimum wage companies may pay adults in the UK over the age of 25 yet, despite the name it does not adequately cover living costs for most people. It does not account for the higher cost of living in London and excludes younger employees and so despite the confusing name, the national living wage isn’t a living wage for anyone really.

The Real Living Wage Foundation however, differs from the wage established by the Government as it is updated each November and provides separate amounts for London and the rest of the UK. Those who sign up to the foundation do so voluntary and recognise the importance of paying a fair wage. The national living wage is currently at £7.83, whilst the Living Wage Foundation recently updated the wage to £9, rising to £10.55 in London therefore, the gap is significant.

So why pay it then? Aside from the argument that paying a real living wage is what is morally right, there is also a strong business incentive. By becoming an accredited employer, we felt that we were ‘practising what we preach’ as we were clearly putting the welfare of our employees as a priority. By paying a real living wage staff sickness is down and can generally help with staff retention and recruitment.

 Source: Real Living Wage Foundation

Source: Real Living Wage Foundation

However, the business aspect was only a small part of why we pay the Living Wage. The financial worries of low wage can play a significant role in deteriorating mental health. The effect of worry is substantial and can affect ability to sleep, relationships and self-esteem. The impact of low wage also feeds into physical health as the cost of living is on the rise, meaning good quality food and housing is not accessible to everyone.

Low wage can be especially hard on families who may have to work long, unsociable hours in order to make ends meet affecting family life. Women, younger people, and those with little education are also at significant risk of low pay but, as housing costs and more unstable work (such as 0 hour contracts) rise, so does the risk of working poor- people who despite employment are at or fall below the poverty line.

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And so, whilst there are business benefits, the impact of paying the real living wage is felt most by the employees. It can mean the different between consistent money worries and deteriorating health to having enough saved over each month to give up second or even third jobs. With the cost of living increasing, it is clear that the minimum wage won’t cut it, especially for the most vulnerable in our society. Therefore, the responsibility falls to businesses and other social enterprises to support our employees.

Of course, it’s not as simple as deciding to suddenly increase everyone’s wage by an additional £1.17 per hour. In fact, you might be wondering how businesses could even afford such costs? At Just Works, we work through contracts and when explaining why we paid the living wage many companies were happy to pay the premium associated. If you want to know more about how the living wage could work for your business, The Real Living Wage Foundation can offer advice and guidance on how to put in place meaningful measures to begin paying all low cost workers the real living wage.