November 4, 2015 9.29 am This story is over 100 months old

The living wage makes pay fair

Fair pay for a fair day: City of Lincoln Council Leader Ric Metcalfe argues that backing the living wage campaign is a benefit to both employee and employer.

Avatar photo
By City of Lincoln Council Leader

We’re now into Living Wage Week – an annual, UK-wide celebration of the living wage and the employers who pay it.

The city has its own Living Wage Forum and is currently running a Making Lincoln Living Wage campaign, encouraging businesses and organisations to use this rate of pay and bringing all those who do together in an online register.

The household incomes of working families have been firmly in the spotlight in recent times with debates on changes to tax credits and the increased minimum wage level from next April.

The Office for Budget Responsibility estimates that firms will recoup the cost of the new minimum wage by reducing staff hours which it believes will have an impact on the lowest income people.

However, we have heard from businesses supporting our Making Lincoln Living Wage campaign that higher salaries can improve the profit margin through greater staff productivity and morale.

The Institute for Fiscal Studies reports some interesting findings from analysis it has conducted:

Working age households currently eligible for benefits or tax credits containing someone in paid work will lose, in net terms, an average of £556 per year, and working families with children eligible for benefits or tax credits will lose an average of £1,127 per year, as a combined result of the tax credit changes / new minimum wage.

The new minimum wage will not compensate households, in aggregate, from losses ensuing from benefits changes. This is because the estimated gain from the new minimum wage, after tax, is £3.5bn, but £12.5bn will be cut from the benefits bill.

The average losses from tax and benefit changes in deciles 2, 3 and 4 (some of the poorest tenths of the population) were £1,340, £980 and £690 per year, respectively. In the ‘better case’ estimates, these same groups are estimated to gain a much lower £90, £120, and £160 from the new minimum wage.

There are a number of sectors of employment in Lincoln that fall into the category of being traditionally low paid, and while the city-wide Growth Strategy aims to create jobs across a range of sectors and pay levels, there is a way that employers can do their bit now to help address the issue of low pay.

That’s by paying their staff the living wage – an hourly rate (£7.85 outside of London) that’s calculated on covering the cost of a decent minimum standard of living.

Evidence shows that not only does it benefit the employee, it also gives real benefits to the employer with lower sickness rates, increased productivity, substantial cost savings on recruitment and induction training, significantly lower rates of staff turnover and showing a business or organisation to be an ethical employer.

The city council has been a living wage employer since 2013 as we believe that not only is it the right thing to do, but that no-one deserves less than a fair day’s pay for a fair day’s work.

If you want to know more about the living wage there’s a host of information on our website here.

Living Wage Campaign from City of Lincoln Council on Vimeo.

Avatar photo

Councillor Ric Metcalfe is the Labour Leader of the City of Lincoln Council.