October 23, 2013 10.09 am This story is over 98 months old

The scourge of low pay

City Council Leader plea: Can we get all employers in Lincoln to pay the Living Wage and be the first place in the country to declare a low pay free zone?

By Ric Metcalfe, City of Lincoln Council Leader

The latest published figures for pay in Lincoln reveal for 2011 that although average pay was 17,500 per annum, the lowest 20% of earners were earning less than £10,000 per annum compared with the highest 20% of earners who were earning above £30,000 per annum.

In 2011 some 24% of Lincoln children were living in low income families. 17% of households in Lincoln are in fuel poverty, spending more than 10% of their income on fuel costs. Most people in Lincoln facing poverty are in work.

Low pay is one of the fundamental causes of poverty and we need to address it with some concerted action.

The City of Lincoln Council recently took the decision, albeit against immensely challenging financial constraints, to pay its lowest paid staff the Living Wage of £7.45 per hour. A number of our very lowest paid front line staff, performing public services in often difficult or unpleasant environments, have already felt the benefit.

To the many working households really struggling to make ends meet in Lincoln, the Living Wage would make a significant difference, particularly for those on the minimum wage, of up to £52 per week extra.

Social Justice alone surely demands that we do something to alleviate current levels of hardship?

But there are however some tangible benefits to employers of paying the living wage. If employees feel they are being fairly rewarded for their efforts, common sense, and all of the evidence shows, that this motivates them, improves their performance and makes them more willing to accept change.

An independent study of 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 organisation. 70% of employers felt that the Living Wage had increased consumer awareness of their commitment to be an ethical employer. Many of the most successful businesses are now beginning to realise how important reputation for ethical practice is becoming among consumers in increasingly competitive markets.

There are also significant benefits arising from the ‘Living Wage’ in terms of increasing local spend. According to an independent report commissioned by Newcastle City Council, lower paid workers tend to spend a greater proportion of their income in local shops and on local services, and that the payment of the living wage had provided an important new stimulus to the local economy.

Improved pay levels are good for the wider community too. Better pay reduces the need for people to turn to the benefit system for income support, and from a wider economic point of view, low pay simply depresses demand at a time when we are looking to increase demand for goods and services to stimulate growth.

Low income has a severely adverse impact on people’s health and well being, and importantly, for future generations, has a very adverse impact on educational attainment.

So, paying the living wage is good for individuals and their families, good for business and good for the local community.

Can we get all employers in Lincoln to pay it and be the first place in the country to declare a low pay free zone?

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