The Living Wage STEP UP

The Living Wage
STEP UP
This briefing is for use alongside the Save the Children ‘Scotland Steps up for a Living Wage’ Film.
We have produced this briefing and the film as tools for Living Wage campaigners across the UK,
based on learning from campaign successes in Scotland. We hope that campaigners will be able to
draw on successes and experiences in Scotland to campaign effectively in their own areas.
This briefing will:
a) define the Living Wage and why it is important in light of child poverty
b) outline the benefits and key arguments in favour of the Living Wage
c) provide a ‘myth busting’ fact sheet to help campaigners counter opposition they may face
when speaking to the public, politicians or employers about the Living Wage
d) provide examples of Living Wage campaign successes from Scotland including a case study
from Glasgow City Council
e) outline the next steps in the campaign and how campaigners and employers can get
involved
f) provide useful contacts for campaigners
What and Why?
What is the Living Wage?
A ‘living wage’ is a minimum level of pay to ensure an acceptable standard of living. The Living
Wage is an hourly rate set independently and updated annually in November. The living wage is
currently calculated as £7.20 (£8.30 for London). This compares to the National Minimum Wage
which is set at £6.08 (for workers aged 21 and over).
The Living Wage is the minimum that someone needs to be able to live on and, if they have
children, raise a family on. This calculation is based on a couple with two children both working
37.5 hours a week and with paid child care and taking up their full entitlement to means tested
benefits. The family lives on a very tight budget in council housing, they do not have a car, pay into
a pension or spend money on debt repayment1.
Why is it Important?
It is vital that everyone who works earns a decent amount of money for themselves and their
family. Yet at present, there are around 350,000 workers2 in Scotland paid less than the Living
Wage, and many more across the UK.
The Living Wage and Child Poverty
The Living Wage can play an important role to end child poverty. The Living Wage campaign
argues that low-paid workers do not earn enough money to support themselves as well as being
able to provide adequately for their children. In fact, low pay contributes to high levels of in-work
poverty Amongst children in poverty in Scotland, almost half are in households where at least one
adult works3. 220,000 or nearly 1 in 4 children in Scotland live in poverty4, and low pay
contributes to the high levels of child poverty in Scotland, and across the UK.
Women and Part-time Workers
Amongst those on the lowest pay it is women and those working part-time who tend to be paid
least. Low pay afflicts significantly more women than men. In countries where child poverty is
lower there tends to be more women in work.
 43% of workers earning less than £7 an hour are women in part time jobs, and overall,
two thirds of all low paid workers are female. 5
 As most single parent, low income households are headed by women, the prevalence of
low pay amongst the female workforce is a major factor in child poverty.6
A Living Wage would be an important step forwards for women in low-paid work. But ensuring
affordable and flexible childcare is also an essential requirement.
Low Pay
The amount employees get paid changes from one area to the next. This is because of the types of
jobs available and the attitudes and customs of local employers. Pay also varies among people
doing the same job, depending on where someone lives.
There is a correlation between low pay and areas with high levels of child poverty. For example,
one in five in Glasgow are paid less than £7 an hour, and these are also areas with some of the
highest levels of child poverty across the UK.7
1
For more information on the Minimum Income Standard, see
http://www.minimumincomestandard.org/livingwage.htm
2
http://www.povertyalliance.org.uk/slw-home.asp Freedom of Information Request 2011
3
Requested from Scottish Government as at 1 Feb 2012
4
Scottish Government (2012) ‘Poverty and income inequality in Scotland: 2010/11’
5
The Poverty Site http://www.poverty.org.uk/51/index.shtml
6
Ending child poverty: Ensuring Universal Credit supports working mums
http://www.savethechildren.org.uk/resources/online-library/ending-child-poverty-ensuring-universal-creditsupports-working-mums
7
The Poverty Site http://www.poverty.org.uk/53/index.shtml?2
Benefits
Benefits to Employees
 Employees on the Living Wage don’t have to work overtime or long hours to earn decent
wages, and in addition they can afford to take quicker modes of transport, such as the
train rather than the bus. As a result they have more time with their families8.
 Children benefit materially from the Living Wage: by paying employees higher wages, they
have more money to spend on their families. For example, the employers in London who
committed to paying a living wage together lifted 3,500 families out of poverty in 2011
alone.9
 Employees on the living wage are more likely to feel valued and satisfied in their work10.
Benefits to Employers
“The benefits outweigh the costs. Its worth
According by to an independent study carried out by the Living
your while. You have a more contented work
Wage Foundation and the interviews conducted by Save the
force and if you have a more contented work
Children with two council Leaders 11:
force, you get better results… People
 Employers who pay the living wage are able to attract
shouldn’t have to work lots of overtime to
higher quality staff and report that staff are more
make ends meet. And we don’t particularly
want to be employing people overtime
productive, and do their jobs better, and there are far
because does cost us more, so its win-win.”
fewer complaints. Greater London Authority found that
(David O’Neill, former Leader of North
more than 80% of employers believe that the Living Wage
Ayrshire Council, now President of
had enhanced the quality of the work of their staff.
COSLA)
 Staff are more likely to be positive and more willing to be
flexible
 Staff are more likely to stay working at the organization for
longer, which saves the employer money on recruiting and training new staff
 Despite better sick pay, employers have reported better staff attendance, and the Greater
London Authority also found absenteeism had fallen by approximately 25%.
 Paying the Living wage also boosts the reputation of an employer
Benefits to Society
 The living wage makes a direct difference to people on the lowest incomes by increasing
the amount of money they earn. Since 2001 the Living Wage has redistributed over £96
million to some of the lowest paid workers in the UK12.
 By improving the incomes of the lowest paid workers in society and beginning to reduce
the difference between the richest and the poorest in society, some argue that the living
wage also leads to better community cohesion.
“[If all employers paid the living wage] It would drive up the quality of life for the people who are the
poorest paid within our communities. It would help to reduce gap between the haves and the have-nots.
And I think it would make for more content communities.” (David O’Neill)
Benefits to the Government
 Because wages from employment are often not enough to provide a decent standard of
living to families, the Government subsidies low pay through the benefits and tax credit
systems. This boosts household income, but it isn’t always enough to lift a household
above the poverty line. If wages were higher, the government would have to subsidise
wages less and could spend the money elsewhere.
8
As highlighted by Citizens UK video http://www.citizensuk.org/campaigns/living-wage-campaign/
http://www.citizensuk.org/campaigns/living-wage-campaign/the-living-wage-foundation/
10
Unison Factsheet http://www.unison.org.uk/file/Living%20Wage%20Factsheet%202012.pdf
11
Taken from the Living Wage Foundation, An independent study of the business benefits of implementing
a Living Wage policy in London, GLA Economics, and discussions with David O’Neill former leader of
North Ayrshire Council, and Gordon Matheson Leader of Glasgow City Council.
12
Living Wage Foundation www.livingwage.org.uk/our-work
9
Myths and TRUTHS
MYTH Paying the Living Wage would lead to job cuts and employers going bust
TRUTH Its true that it costs money to pay higher wages. However the lower staff turnover,
decreased absenteeism and increased staff morale and productivity rates can lead to significant
savings for employers. For example the Chartered Institute of Personnel and Development (CIPD)
have worked out that the average cost of filling a vacancy in 2010 was £2,93013.
In addition the council leaders that we spoke to didn’t believe that the costs were high as people
thought:
“It cost North Ayrshire council approximately an extra £180,000 [to pay the living wage]. But what North
Ayrshire spends every year is £450 million, so not an awful lot….By making a relatively small financial
commitment, we were able to make a fairly substantial difference to the lives of a relatively large number
of people, and I think that was a good thing. “
(David O’Neill)
“[Paying the living wage] wasn’t a huge financial burden… People used same arguments as they did
against the minimum wage, but it has similar benefits.…its about providing a baseline, a decent income.”
(Gordon Matheson, Leader of Glasgow city Council)
MYTH People are not better off on the Living Wage as their benefits are withdrawn
TRUTH Some have argued that the Living Wage is not an effective way of tackling poverty
because higher incomes can lead to loss of some benefits and tax credits. While it is true that the
impact of the Living Wage can be diluted by benefit and tax credit withdrawal, the Living Wage
will still lead to an increase in overall income even when withdrawal occurs:
As an example, research by the Scottish Government14 has shown that implementing the Living
Wage would increase the net income of a single parent with one child by 5%, while a married
couple with one child would see their income increase by 11%.
Moreover, the financial benefits of wage increases will tend to be greater under Universal Credit
because this will withdraw benefits at a flatter and usually slower rate. This should have positive
implications for child poverty.
MYTH We are in a recession – the government can not afford it
TRUTH The more people on higher wages, the more tax the government receives and the less
the government needs to spend on benefits. This also means that more money gets put back into
the local economy.
MYTH Staff are employed by a contractor, so it isn’t our responsibility
TRUTH Employers have a responsibility to ensure that services provided by contractors on their
premises meet standards, and that all contractors providing services act in accordance with
equality legislation and provide decent work conditions. Contracting out services should not dilute
employment standards.
13
14
http://www.cipd.co.uk/binaries/Barometer_HR_trends_prospects_2010.pdf
Scottish Government (2010) Low pay and income inequality in Scotland
Living Wage Successes
There is widespread third sector support for the Living Wage Campaign in Scotland and a number
of organisations including Save the Children, Poverty Alliance, the Scottish Trade Union Congress
(STUC), Church of Scotland, Unison, Unite, GMB, Oxfam, the Scottish Youth Parliament and the
Child Poverty Action Group are working to see it adopted nationwide.
Political Support
Following widespread support from the third sector there has been a dramatic increase in political
support for the Living Wage in Scotland. The Labour Party, SNP and Greens all opted to support
the Living Wage to differing degrees in their manifestos for the 2011 Scottish Parliament elections,
and the SNP pledged that every SNP Council will deliver a living wage for all employees following
the local authority election campaign 2012.
The Local Government Committee in the Scottish Parliament has announced that it supports all
local authorities to pay the Living Wage, although becoming a living wage employer continues to
be voluntary At UK level the Living Wage enjoys cross-party support, with public backing from the
Prime Minister and the Leader of the Opposition.
Public Sector
Since 2008 the Living Wage has gathered increasing prominence in Scotland mainly in the public
sector. The Scottish Government introduced the Living Wage for directly employed staff, staff in
its agencies and the NHS. At the time of writing, a total of 28 Local Authorities in Scotland are
either paying the living wage, or have pledged to do so 15.
GMB, Unite and Unison unions have recently stepped up demands for all council workers to be
paid a living wage as part of their work on pay negotiations, adding further weight to the campaign.
Despite the campaign successes and support so far, there is more to be done!
In Scotland - Across Scotland, thousands of Local Authority workers still are not paid the living
wage. Additionally many workers who are indirectly employed by councils – through contracted
work for instance – do not receive the Living Wage.
In the rest of the UK – Many employers are beginning to sign up to the Living wage; Between them,
the 140 employers who committed to paying a Living Wage in London have lifted more than
10,000 families out of working poverty16. In July 2012 Cardiff Council committed to becoming the
first local authority in Wales to pay the Living Wage, which will benefit more than 2,000 low-paid
employees – around 10% of the workforce. There are many other examples of commitments
being made, but we would like to see more employers sign up!
15
16
Latest figures from the Poverty Alliance
Living Wage Foundation www.livingwage.org.uk/employers
Case Study:
Glasgow City Council
Two of Save the Children’s Young Ambassadors met with
David O’Neill to interview him on implementing the
Living Wage in Glasgow
CASE STUDY- Glasgow City Council
Glasgow City Council started paying the living wage in 2009, as the result
of the decision by the leader of the Council. The introduction of the
Glasgow Living Wage increased the salary of almost 700 employees of
Glasgow City Council and its partners. The introduction of the living wage
increased the basic salary of the lowest paid Council workers by up to
£1100 a year.
Leader of the Council, Gordon Matheson, believes it has improved the
atmosphere and culture of work within the council. “Would you want to
work for less? I can be confident that all my staff earn a decent wage, that
I am not ashamed to pay”.
Since then, over 160 employers across Glasgow have started paying the
Living wage, in part due to incentivized partnerships between the council
and businesses. Combined these employers pay 50,000 staff in Glasgow
the living wage.
Councillor Matheson’s advice to employers is: “Do it. There is no down
side- Take the step. Live by example. It is a statement on who you are,
and creates a better atmosphere.”
Next Steps…
All Local Authorities to pay the Living Wage
Although most Local Authorities in Scotland pay the Living Wage but there are still 18,000 directly
employed staff in local government who earn less than £7.20 per hour17. It is therefore important
that we continue to encourage all Local Authorities to sign up.
Local Authorities encourage other Employers
As highlighted in Glasgow, once a local authority pays the living wage, they are a positive role
model for the area, and are able to encourage businesses to follow by using incentives. This has
the potential to impact an even wider number of employees and their families.
Procurement policies
As well as encouraging remaining Local Authorities to pay the living wage, in Scotland, where a
majority of local authorities already pay it, some campaigners have begun to look at ensuring that
workers who are indirectly employed by Local Authorities are paid the Living Wage.
What you can Do
If you are a campaigner
We have a film for use with this briefing. Watch it and show it to others! You can find it here:
http://www.savethechildren.org.uk/get-involved/campaigns/step-up-for-a-living-wage
For more information contact k.mcs[email protected]
If you are an employer
Sign up as a living wage employer and get accredited by Living Wage Foundation.
The Living Wage Foundation provides advice, support and accreditation to
Living Wage employers. Accredited employers are entitled to a licence to use
the Living Wage employer mark. The accreditation process is simple and is open
to employers already paying the living wage, or those committed to an agreed
timetable of implementation.
17
www.scottish.parliament.uk/S4_LocalGovernmentandRegenerationCommittee/General%20Documents/Scott
ish_living_wage_campaign.pdf
Useful Links
For more on Save the Children’s work on the Living Wage across the UK, and other resources
see: http://www.savethechildren.org.uk/get-involved/campaigns/step-up-for-a-living-wage
Scotland
The Scottish Living Wage Campaign is hosted by the Poverty Alliance
http://www.povertyalliance.org.uk/slw-home.asp
The Scottish Youth Parliament have launched a youth-led campaign for the Living Wage across
Scotland http://www.syp.org.uk/
More information about the Glasgow Living Wage Campaign can be found here
http://www.glasgowlivingwage.co.uk
UK Wide
Living Wage Foundation supports, recognises and celebrates Living Wage Employers
http://www.livingwage.org.uk/
FairPensions' JustPay! Campaign aims to permanently embed Living Wage standards in the UK's
private sector, beginning with the biggest companies on the London Stock Exchange, namely the
FTSE 100. http://www.fairpensions.org.uk/justpay
Citizens UK are a ‘community organising’ organisation who are campaigning on the Living Wage
http://www.citizensuk.org/campaigns/living-wage-campaign/
Minimum Income Standard in the United Kingdom is an ongoing programme of research to define
what level of income is needed to allow a minimum acceptable standard of living in the UK today.
The organisation is supported by Joseph Rowntree. http://www.minimumincomestandard.org/
Use the internet to find out who else is campaigning on the Living Wage in your area
and get involved!