New Internationalist

Put paid to poverty

The time has come for Britain’s biggest companies to pay living wages, says guest blogger Matthew Butcher of FairPensions.

The plight of people being paid starvation wages across the world has been rightly highlighted many times in the New Internationalist. While the extreme poverty suffered by workers in the developing world deserves our attention, there is also growing concern over workers here in the UK being paid poverty wages.

At the beginning of this month, a group of investors with a combined wealth of over £13 billion joined forces with FairPensions and their union colleagues to ask Britain’s biggest listed companies to pay living wages to all of their on-site staff. The living wage, they suggested, brings benefits to both employees and employers and, according to the Prime Minister, is an idea ‘whose time has come’.

Banksy street cleaner, Chalk Farm

Banksy street cleaner, Chalk Farm. Photo by Dan Brady under a CC Licence.

A living wage is the minimum hourly wage necessary for housing, food and other basic needs for an individual and their family. Within London, the Mayor’s Office announces the living wage figure each year – currently £8.30 (roughly $13.50) per hour. Outside London, the Centre for Research in Social Policy at Loughborough University has calculated a single rate for the regions outside of the capital which is £7.20 ($11.70) per hour. The National Minimum Wage, currently £5.93 ($9.65),on which many people survive, simply does not provide people with enough money for a decent quality of life.

Across Britain there are over 3.5 million people over the age of 22 struggling on less than £7 an hour. With inflation running at 4 per cent and the increasing likelihood of public services being withdrawn, it is becoming ever more difficult for those on the lowest wages to remain solvent. At the very same time, Britain’s biggest companies are, for the most part, posting huge profits – running at times into billions of pounds –and continuing to pay their top-end staff hundreds of thousands of pounds per year at the very least.

Low pay is particularly pernicious in its impact on children’s lives. In five years – between 2004 and 2009 – the number of poor children in a household with at least one worker grew by 25 per cent and, according to the most recent research, there are 2.2 million children growing up in poverty with at least one parent working. Less than 50 per cent of children in poverty grow up in ‘unemployed households’.

Children growing up in low-income households are more likely to have poor health, to perform badly at school, to become teenage parents, and to come into early contact with the police. Workers on low wages are also often forced to work instead of spending time with their family. This can be extremely hard on families with young children. A cleaner at Marks and Spencers, working for a contractor, described her shifts: ‘I work seven days a week and like many other cleaners I have to get up at 3 o’clock in the morning to get to work from Leytonstone where I live. We can’t afford the tube and I spend two hours one way to get to work. My morning shift is only four hours.’

The living wage does, as you would expect, have its critics. ‘This is no time to think of paying people more, it’s an age of austerity’ they say. The fact is, however, that corporate Britain paying its way could actually save the government money. Low wages are often ‘boosted up’ by government tax credits which are aimed at encouraging people to work even if the pay is low. If corporations, whose finances are often in better shape than the government’s, paid their workers a living wage then there would be more money in the public purse to spend on health, social care and job-centre staff, for example. Studies have also shown that people tend to spend their extra money in their local, often deprived, areas, thus boosting the economy as a whole.

The ethical implications of low wages are well publicized and need not be repeated, but the business case for paying living wages is often ignored. Eighty per cent of living wage employers in London believe that paying the living wage enhances the quality of work done by their staff. Guy Stallard from KPMG Europe was very pleased to be paying his cleaners living wages:

‘We’ve found that paying the living wage is a smart business move, as increasing wages has reduced staff turnover and absenteeism, whilst productivity and professionalism have subsequently increased.’

The living wage is not just a concept, it has been put into practice and proven to work.  Living wages have already been adopted by organizations all over the country. The NHS in Scotland, KPMG in London and many universities have already applied the standard. In the last 10 years the application of living wage standards has lifted 8,000 people out of working poverty in London. Amin Hussein, a cleaner now earning a living wage, is enjoying the benefits of better pay: ‘When the living wage was introduced, I was able to prioritize one job and that means I’ve been able to be there for my family and set up a youth group in my community.’

The time has come for Britain’s biggest companies to pay their way and ensure that all of their workers earn enough to enjoy a decent quality of life.

Take Action
FairPensions’ first Living Wage action is pressuring finance companies to become Living Wage employers. Anyone who has a financial product with a FTSE 100 company can take action – and that probably includes you!

Activating the power of our organized money to call for living wages will literally change lives, lifting families out of working poverty.

Put pressure on your banks and insurers now at www.activateyourmoney.org


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