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 [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!
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