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A Living Wage is good for business

Unision regional secretary says businesses have seen productivity and turnover improvements after paying the Living Wage

West Mildands campaigners welcome the new Living Wage rate of £8.45 per hour

“Hasn’t the Government introduced a living wage?” I hear you say.

“Not really” would be my reply.

The Government uses the words “national living wage” but it is actually a sleight-of-hand, as the words aren’t reflected in the numbers.

The “national living wage” is an uprated minimum wage of £7.20 an hour for those over 25. Under-25s get the minimum wage of £6.95 an hour.

If you are 24, doing the same job as a 25-year-old, you’ll be paid 25p an hour less, even though it costs you the same to travel to work, for food and to pay your bills. How can that be right?

If an employer pays only the legal minimum wage, what it really means is they’d like to pay less, but they can’t. How valued do you think those staff feel? The real (voluntary) Living Wage was updated this Monday, to £8.45 an hour. This figure is set independently as the minimum required for a reasonable standard of living. I’m guessing most Birmingham Post readers are paid a lot more than the Living Wage, so here’s some context.

Someone over 25, working 40 hours a week, paid the government-set national living wage would get £256 a week net (£288 gross). On the Living Wage they would get £297 a week net (£338 gross).

Even £297 is not a king’s ransom but it is £41 a week more and could be enough to stop someone being forced to make the intolerable choice between eating or heating. The moral case for the Living Wage is inarguable. But there are business benefits, too. Don’t take my word for it. Let’s see what KPMG has to say.

KPMG not only pays the Living Wage to all its staff and contractors, it has also done a lot of research about the business benefits.

It has reported many benefits, including reduced staff turnover, increased quality, reduced absenteeism, recruitment and retention of staff, worker morale, and productivity benefits.

Guy Stallard, head of facilities management at KPMG, says: “Adopting the Living Wage was about going through a change management programme considering how we redefined service levels… in terms of values, and not just what we paid.”

The industry has changed and there are now 75 Living Wage recognised service providers who encourage the Living Wage to be paid, knowing it results in a motivated workforce delivering a high-quality service.”

Barclays is another Living Wage employer. Its employee relations director Dominic Johnson states: “Having supported the Living Wage for over ten years, we know that it can improve productivity, morale and retention rates.”

Birmingham City Council is another Living Wage employer, as is my union UNISON.

The Living Wage is good for Birmingham’s local economy, too.

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Poverty pay is a real issue here in Birmingham. Official figures produced last year showed that Birmingham is the worst place in the country for earning a decent wage.

For example, over half of all working people in Northfield earn less than the Living Wage.

A 2014 Joseph Roundtree Foundation report said that being paid more “increases incomes and people’s disposable expenditure and raises spend and demand in the local economy, directly benefiting local businesses and creating a ‘multiplier’ effect. Areas with high levels of in-work poverty would gain the most from increasing pay levels.”

So there you go: the Living Wage is good for workers, good for businesses, and good for the Birmingham economy. So, why aren’t you paying it?

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