Spreading the word on the living wage

By James Carson

Last week, Church of England bishops issued a letter calling for a new direction that they believe political life in the UK ought to take. Among the bishops’ recommendations was support for the living wage:

“It represents the basic principle that people are not commodities and that their lives cannot adapt infinitely in response to market pressures.”

It didn’t take long for the media to find flaws in the Church’s own approach to paying its staff. This week it was reported that a Church job in Canterbury was being advertised at £6.70 per hour. The living wage, calculated from the basic cost of UK life, is currently £7.85 an hour outside London.

Low pay seems likely to be one of the key issues in the general election campaign, so a new report from the Joseph Rowntree Foundation (JRF) is especially timely.

Low pay is endemic

The report describes low pay as “endemic” in the UK labour market, noting that more than one in five workers in the UK experience low pay, a proportion that has changed little in more than 25 years.

Among the research findings:

  • More than a third of low-paid workers (38.4%) experience a period of worklessness over a four year period;
  • Being low paid increases the probability of experiencing a period of worklessness by around 10%, after accounting for a host of individual, family-level and employment characteristics;
  • Those low-paid workers on temporary contracts, and those with work-limiting health conditions or disabilities, are the most likely to experience a spell of worklessness over a four-year period.

The authors of the report express concern that when many of those workless individuals who were formerly low paid return to employment, it is to a similarly low level of earnings.

“This low-pay, no-pay cycle means many find it difficult to escape low living standards and advance in the world of work.”

In addition, the JRF report highlights  the significant burden on the state of having large numbers of low-paid workers alternating between employment and worklessness, and suggests that significant fiscal savings could be made if job security for those in low-paid positions was strengthened.

While the paper does not propose any specific policy recommendations to tackle the employment insecurity of low-paid work, the authors suggest that several areas of policy offer potential for co-ordinated solutions to this problem, including:

  • extending access to skills and training to those who are in work and lack qualifications;
  • limiting the burden of unplanned absence from work to employers through the targeted re-introduction of schemes such as statutory sick pay recovery;
  • providing support alongside incentives for low-paid workers to progress through in-work conditionality within Universal Credit.

The movement to encourage more employers to pay the living wage has picked up pace in recent months. Organisations such as Citizens UK and the Living Wage Foundation have campaigned to encourage more employers to pay the living wage. Even so, by the end of 2014, only 60,000 people in the UK were covered by this pay rise, with none of the big supermarkets or large care firms involved. Some local authorities, however, including Glasgow, Cardiff, Birmingham, Newcastle and the Greater London Authority, have adopted the living wage.

As the JRF report underlines, paying the living wage to employees results in reduced welfare benefits and extra taxes. Which means that, whether the employer is Tesco or the Archbishop of Canterbury, the living wage can give people basic rights and a sense of dignity in work, while making good economic sense for the nation’s coffers.


Further Reading

We’ve previosuly blogged on the living wage and addressing the causes of in-work poverty.

Other resources which you may find interesting (some may only be available to Idox Information Service members):

Wealth: having it all and wanting more

The benefits of tackling worklessness and low pay

Ten years of the GLA’s London Living Wage

Bare minimum is not enough (living wage)

Low pay Britain 2014

2 thoughts on “Spreading the word on the living wage

  1. Pingback: Costs and benefits of the National Living Wage | The Knowledge Exchange Blog

  2. Pingback: Why child poverty can’t be allowed to slip down the political agenda | The Knowledge Exchange Blog

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