The Living Wage: Stemming the tide of ‘in-work’ poverty

By Rachel Wilson, Political Reporter 

Living wage London

On November 4 2013 the Living Wage rose by 25p to £8.80 an hour in London. Outside of London it rose from £7.45 to £7.65.

Focused on stemming the rising tide of ‘in-work poverty’, the modern UK Living Wage campaign was launched by members of London Citizens in 2001 to address the fact that one in five people in the UK get less than the Living Wage.

This phenomenon of ‘in-work’ poverty is highlighted by the recent report from the Social Mobility and Child Poverty Commission (SMCPC): “Two-thirds of poor children are now in working households” (State of the Nation 2013: Social Mobility and Child Poverty in Great Britain, October 2013).

The report states that “being born poor often leads to a lifetime of poverty. Poor schools ease people into poor jobs. Disadvantage and advantage cascade down the generations”.

One effect of the recession is also that parts of society which would never have viewed themselves as poor are now beginning to feel the squeeze.

According to The SMCPC: “The first fundamental change is growing insecurity among average-income families, not just lower-income ones.

“Poverty is dynamic, with almost half of Britain’s citizens finding themselves poor at some point over a nine-year period… [and] recent falls in family incomes and living standards have put the squeeze on many low- and middle-income families.

“When combined with rises in house prices, university fees and youth unemployment these factors have induced a sense of fear among many average-income parents that their children will be worse off than they were.”

To stem this rising tide of ‘in-work’ poverty, the Living Wage is a crucial tool to improve the wellbeing of people, some whom struggle with two or more jobs just to put food on the table.

According to the Living Wage Foundation, paying the Living Wage is “good for business, good for the individual and good for society”. There is also evidence that paying employees a Living Wage reduces absenteeism and improves retention of staff.

Boris Johnson also agrees. “Paying the London Living Wage is not only morally right, but makes good business sense too.”

Set by the Greater London Authority, the London Living Wage is currently set at £8.80 per hour while the UK Living Wage outside of London, determined by the Centre for Research in Social Policy at Loughborough University, sits at £7.65 per hour.

The current UK Minimum Wage is £6.31.

Globally, there is no pressure on employers to raise wages due to the downward pressure on pay caused by oversupply of cheap labour, while in the UK the majority of those on low pay are women, part-time workers. The UK now has one of the worst pay gaps in the EU.

Furthermore, women are bearing the brunt of the recession. Research by the Fawcett Society found that women are more likely to be low paid and the TUC estimates that 29 per cent of women compared to 16 per cent of men are in low paid work.

Women are more likely to work part-time and be in vulnerable employment, with 5.7 million women compared to 1.8 million men in part time employment (Fawcett Society, Are Women Bearing the Burden of the Recession? March 2009).

Helping address this, the Living Wage Foundation was launched in 2011 to set a living wage based on the actual cost of living and is responsible for the accreditation of Living Wage employers.

Mirroring the Fair Trade campaigning strategy, the Living Wage is deliberately non statutory, the argument given is that this makes it a better campaigning tool. Furthermore, some smaller businesses would not be able to afford the Living Wage.

The London Living Wage now benefits around 18,800 London workers. In London there are over 200 employers that are now fully accredited – including the GLA and TfL – plus around a further 90 working towards accreditation.

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