Living Wage: Making our economy work for the many

By Lucy Rigby lucyrigby

This week is Living Wage Week, a country-wide celebration of those employers who pay their staff the ‘Living Wage’, recognised nationally as an amount sufficient to live on. It’s the ideal time for us here in Lincoln to celebrate those employers within our city who pay the Living Wage, and to ensure that others are aware of the vast benefits which the Living Wage brings to both employers and employees alike.

Happily, we can be very proud that some of our most well-known and iconic Lincoln businesses and organisations already pay their staff at least a Living Wage, including the University of Lincoln, Bifrangi, our wonderful Lincoln Cathedral, the City Council and Globe Consulting.

Low pay is a chronic and growing problem, here in our city and across the country. The minimum wage is no longer enough to live on, yet there are more low-paid workers than ever before, and those that are paid the minimum wage are stuck on it for longer than ever before. In 2013, there were 4.9 million workers in the UK who were paid less than the Living Wage, an increase of 1.5 million people since 2010. The proportion of UK workers who are low paid is one of the worst in the developed world – we are 19th in the league table of the 25 OECD most developed countries.

This explains why we have seen such an exponential rise in in-work poverty and in foodbank usage. In fact, half of those living in poverty in the UK are actually in work, and two-thirds of all children living in poverty live in working families. If people can’t make ends meet, they have to rely on social security; in fact, low pay is one of the biggest drivers of rising welfare bills. The cost to the exchequer of workers paid less than a Living Wage was estimated last year at £3.23 billion in social security spending and lower tax receipts. Normally when an economy grows, income tax receipts go up, but because of the epidemic of low pay, tax receipts are actually falling, the deficit is rising again and Osborne’s sums are going wrong.

This is just not right. If you go out to work, you should earn enough to live on – you definitely shouldn’t have to rely on benefits to get by. But the case for the Living Wage isn’t just about employees, it’s better for employers too. Across the country, many employers have found that paying the Living Wage makes good business sense, generating savings by boosting productivity and morale, and reducing staff turnover.

A Labour Government elected next year would incentivise more businesses to pay the Living Wage with ‘Make Work Pay’ contracts, where employers share in the public savings that arise when they pay their workers a Living Wage. For every extra pound employers pay to raise workers from the minimum to the Living Wage, the Treasury saves on average 49p through lower social security payments and higher tax revenues. In return for becoming accredited Living Wage employers, businesses will receive 12-months’ worth of the resulting increased tax and National Insurance revenues received by the Government. If the Government introduced this today, firms could receive a 12-month rebate of up to £1,000 – an average of £445 – for every low paid worker who is moved onto the Living Wage.

All in all, the Living Wage is an integral part of making our economy work for the many, not just the few. It’s good for businesses and employees alike and it’s something I’m very proud to support – I hope as many organisations as possible in our city take it up.

Lucy Rigby is Lincoln Labour's candidate to be the city's next MP. She is a solicitor and lives in central Lincoln.