Member Article

Why paying the Living Wage is good for business

This week, a London business that provides contracted cleaning services at Sotheby’s auction house has announced it will be paying all cleaning staff the London Living Wage. Contract Cleaning and Maintenance (London) Limited (CCM) will pay cleaners and porters at the famous Bond Street location £9.15 per hour, backdating the increase to 1st November 2014.

The National Living Wage currently sits at £7.85 an hour, while the National Minimum wage is a mere £6.50 for those aged 21 and over. Due to significantly higher living costs, the London Living Wage is at £9.15 - 40% more than what many people earn in retail, cleaning and hospitality jobs in the Capital. In October, Curzon Cinemas began paying staff the London Living Wage (£8.80 at that time), becoming the first UK cinema group to do so.

Simultaneously, there are several instances in which even the National Minimum Wage isn’t being met. Earlier in the week, the government released a list of 70 employers who failed to pay their staff the National Minimum Wage. It is blindingly obvious from this list of 70 companies that the sectors suffering the most are catering, hospitality, retail and carework.

According to research carried out by the Living Wage Foundation, twice as many companies pay their lowest paid workers the Living Wage in 2014 as in 2013. However, this trend is yet to catch on with major companies with only 18 FTSE100 companies signed up. The main issue is that 22% of workers, that’s 5.2 million, are still not earning the Living Wage.

So, what are the advantages of paying staff the Living Wage? Other than the obvious personal financial benefits for those involved, there is evidence to suggest that paying the Living Wage would be greatly advantageous to the economy. An independent study looking at the business benefits of implementing a Living Wage policy in London found that more than 80% of employers believe that the Living Wage had enhanced the quality of the work of their staff, while absenteeism had fallen by approximately 25%. Two thirds of employers reported a significant impact on recruitment and retention within their business after introducing the wage increase. In addition, 70% of employers felt that the Living Wage had increased consumer awareness of their organisation’s commitment to be an ethical employer - as with the Sotheby’s story, a wage increase can be great PR.

Although a seemingly impossible task in the current financial climate, I truly believe that increasing workers’ wages to the Living Wage would have significant long term economic benefit. The extra money workers receive would not only improve living standards, but would also give people the opportunity to spend more on consumer products that may seem like a luxury to anyone earning below the Living Wage. I really hope that big businesses will take note from the smaller chains who have successfully implemented this all-important wage increase and, before long, we will start to see a domino effect of businesses signing up to meet the Living Wage.

This was posted in Bdaily's Members' News section by Ellen Forster .