"The living wage offers a better future for the UK's one million working poor"

The Living Wage Commission has published its final report, in which it recommends that all public sector staff should be paid living wage, and that the government should encourage the private sector to do likewise.

Here is the Commission's Chair, the Archbishop of York, writing in the Guardian:
http://www.theguardian.com/commentisfree/2014/jun/24/living-wage-brighter-future-one-million-working-poor

And here is the report itself:
http://livingwagecommission.org.uk/wp-content/uploads/2014/06/Work-that-pays_The-Final-Report-of-The-Living-Wage-Commission_w-3.pdf

Sign the petition asking Tesco to pay a Living Wage

There's a new petition on 38 Degrees to ask Tesco to pay Living Wage to all their employees. It's to be delivered before their AGM this Friday, so it's best to sign before then:

https://you.38degrees.org.uk/petitions/tesco-pay-your-workers-a-wage-they-can-live-on

“I worked at Tesco for over seven years, and saw first-hand the problems created by poverty pay. Too many of my colleagues struggled to get by, even with a full-time job.."

Big Retailers and the Living Wage

Retail is one of the  biggest employment sectors in the UK - according to the Office for National Statics, retail and wholesale together employ more people in the UK than any sector, around 4.7 million people. Some of the biggest employers in this huge area are supermarkets and chain stores: Tesco alone employs 538,000 people, with Sainsbury's on157,000 and Asda around 175,000.

Frome is unusual in the UK in having a thriving selection of small independent shops, but supermarkets and chain stores remain major employers in the area, with large Sainsbury's and Asda stores on the outskirts of town, a smaller Tesco Express on Forest Road, and the town centre hosting outlets of Boots, Iceland, Superdrug, Argos, WHSmith and others. Most of these outlets have many more employees than a typical independent shop, and yet another large supermarket is controversially planned for the Saxonvale development.

With so many people employed by these companies - many in relatively low-paid roles - they clearly must be included in any campaign for a Living Wage.

So, what sort of wages are these companies offering?

No major store has yet committed to paying their staff a Living Wage.

Judging by vacancies listed on their websites, some of these companies are offering wages above the National Minimum Wage - which is currently £6.31 per hour for employees aged 21 and over - but well short of a Living Wage (£7.65 per hour outside London). 

For example, the standard rate for a General Assistant or Counter Assistant role at Sainsbury's is £6.71  per hour. Lidl offer rates of between £6.70 and £6.90 for Store Assistant and Caretaker roles outside the M25. Not all companies make starting wages public through their advertised vacancies - Tesco, Asda and M&S all lack this information online. But if they paid a Living Wage we would certainly know about it!

Disappointingly, some companies appear to be determined to pay their staff the absolute minumum they possibly can. Superdrug lists several minimum wage vacancies in the South West. Most surprising of all, a job posted by WHSmith in Frome (see the screenshot below) specifies a wage range of between £4.28 and £6.19 per hour.  The maximum of this range is actually below the current National Minimum Wage for people aged 21 and over, and the minimum could only legally be paid as an hourly rate to employees under the age of 18! (Despite this, note that they are looking for experienced candidates "used to working in a customer focused environment".)

Clearly there is an aversion among these large successful companies to paying Living Wage. What would be the cost to them of doing so?

The IPPR Report 'Beyond the Bottom Line' describes the expected increase in wage costs across different sectors of introducing the Living Wage - this predicts a 5.6% increase in the wholesale and retail sectors of which supermarkets and chain stores are a part (page 30, Table 2). A separate analysis modelling the expected impact on the UK's largest companies predicts a 4.7% rise in wage bills for these large firms in the Food and Drug Retail sector, and 4.9% for General Retailers (page 32, Figure 9). 

Taken together these suggest that big retailers could expect around a 5% increase in employment costs from introducing the Living Wage - a relatively modest amount, when one considers the many other costs - advertising, marketing, property, distribution - which these companies manage as part of their total expenditure.  

Furthermore, the report stresses that the sort of modelling employed in these predictions often overestimates the impact of wage rises on company profits (and were found to have done so when the National Minimum Wage was introduced). In part this is because paying Living Wage actually increases productivity - employees paid a higher wage are more motivated to be productive, thus increasing their value to the employer and mitigating the cost of increasing wages. Paying better wages also reduces staff turnover, which in turn reduces recruitment and training costs. Increased productivity can also result from employers regarding employees as a more valuable resource as a result of their higher wage costs, encouraging them to introduce more efficient organisational structures such as better team-work and multi-skilling. These productivity gains have been seen most strongly in larger firms, suggesting that supermarkets and other large retailers are among the best-placed companies to benefit in this way. 

There are some concerns that introducing the Living Wage might induce companies to increase their prices - however firms like supermarkets need to remain competitive, and there is evidence from past wage rises that predicted price rises (e.g in response to the National Minimum Wage) did not materialise, as firms found other ways to absorb costs, or benefited from increased staff productivity. 

What would be the benefits of big retailers paying Living Wage?

As outlined above, supermarkets and chain stores could expect to see an increase in productivity if they paid their staff a living wage. 

In addition, at a time when consumers are becoming choosier about where they do their grocery shopping, being seen to be an ethical employer could be great PR for supermarkets and other stores worried about falling market share. Firms like Sainsbury's are keen to publicise their Fairtrade credentials, so taking the step to support fair pay could work just as well in their favour among shoppers attracted by more ethical choices. 

Obviously many retail employees themselves would benefit. If the Living Wage was paid to all low-wage earners, just over five million employees (20.6% of the total) would see their wages rise - and a significant proportion of these low-paying jobs are in retail.  As well as finding it easier to make ends meet, employees paid the Living Wage report an increase in job satisfaction and motivation. 

There would be advantages beyond the stores and their employees too - public finances would benefit, as the amount spent on in-work benefits would be reduced, and income-tax and national insurance contributions increased. And the economy in general would be boosted, which would in turn feed back into more people spending more money in the stores themselves.

When campaigning for the Living Wage, it may seem like an impossible task to persuade giants like the supermarkets and other big stores of its benefits - however these benefits would be just as great (or even greater) for these companies and their staff as for the many smaller companies who have already become Living Wage employers. 

The Living Wage Foundation have been putting pressure on retailers like Tesco and M&S - so far without success. See here for an article on their efforts from November last year. 

About the Living Wage, and how Frome could benefit

We've just added some information and links to our page About the Living Wage. Check it out and let us know what you think!

The aims of the Living Wage Frome campaign are:

• Raise awareness of the benefits of the Living Wage for everyone, and provide information on the Living Wage
• Encourage employers in Frome to pay Living Wage - this includes both small local businesses, and larger national companies who employ people locally
• Publish a directory of local employers who pay Living Wage, allowing consumers to choose to support these businesses

If you'd like to join us, or have any questions or comments, please get in touch using the Contact Form.

Welcome to Living Wage Frome!

This is the new site for Living Wage Frome. The Living Wage benefits employees and employers alike, and we'd love to see a wide adoption of it in our local area.

Check back here for news on the campaign, and more information on the Living Wage.