Living Wage Foundation

The Living Wage Foundation is an campaigning organisation in the United Kingdom which aims to persuade employers to pay a Living Wage, an independently-calculated recommended minimum wage to cover workers' basic needs. The organisation was established in 2011, publishes an annual Living Wage figure and accredits employers who pay the wage. From November 2017 the Living Wage rate is £8.75 per hour outside London and £10.20 per hour within London, a 3.6% increase on the previous year's figures.^[1]

History

The Living Wage Foundation grew out of the Living Wage Campaign which originated in London. The campaign was launched in 2001 by members of London Citizens, a community organisation which subsequently developed into the nationwide community organising institution Citizens UK. The Living Wage Campaign called for every worker in the country to earn enough to provide their family with the essentials of life.^[2] It engaged in a series of Living Wage campaigns and in 2005 the Greater London Authority established the Living Wage Unit to calculate the London Living Wage, although the authority had no power to enforce it.^[3] The London Living Wage was developed in 2008 when Trust for London awarded a grant of over £1 million for campaigning, research and an employer accreditation scheme. The Living Wage campaign subsequently grew into a national movement with local campaigns across the UK. The Joseph Rowntree Foundation funded the Centre for Research in Social Policy (CRSP) at Loughborough University^[4] to calculate the Minimum Income Standard (MIS), a UK-wide figure taking an average from across the whole country and independent of the higher living costs in London. In 2011 the CRSP used the MIS as the basis for developing a standard model for setting the UK Living Wage outside of London^[3] and other cities around the UK began to adopt the campaign. As a result of the campaign’s success, Citizens UK set up the Living Wage Foundation and the Living Wage Employer mark in 2011 to provide companies with intelligence and accreditation.^[5][6] The Living Wage Foundation argues that paying a Living wage is not merely ethical, but also constitutes business best practice and improves productivity.^[5]

Having bought shares in Next plc, the Living Wage Foundation sent representatives to the company's annual general meeting in May 2014 in an attempt to persuade the company to pay at least £7.65 per hour and become the first retailer among the UK's 700 living wage employers. Next was chosen because it was considered to be a good employer and was thriving. Professor Sir George Bain who set the minimum wage in 1999 said employers could afford to pay much more but acknowledged enforcement could cause unemployment in the retail sector.^[7]

Calculation

The Living Wage Foundation publishes the Living Wage figure: an hourly rate, set independently every year, and updated annually in November. It is calculated according to cost of living and gives the minimum pay rate required for a worker to provide their family with the essentials of life. The living wage is based on a basket of goods which ordinary people think are essential for a healthy, normal family life. There is one rate for London and another rate for the UK outside London. The living wage in London is calculated by GLA Economics and set by the Greater London Authority. The rate outside London is calculated by the Minimum Income Standard team at Loughborough University, supported by the Joseph Rowntree Foundation. In London the 2010-11 rate was £7.85 per hour. The recommended rates for 2015 were £9.40 for London and £8.25 for the rest of the UK.^[8]

In January 2016 the Living Wage Foundation set up a new Living Wage Commission to oversee the calculation of the Living Wage rates in the UK.^[9]

Legal status

The Living Wage calculated by the Living Wage Foundation has no legal status. Instead, minimum wage levels in the UK are determined by the statutory national minimum wage set up by the National Minimum Wage Act 1998. The rates are reviewed each year by the country's Low Pay Commission. The national minimum wage aims to protect the lowest paid from exploitation, but its level often falls short of the local cost of living^[10] and it has increasingly failed to prevent in-work poverty without welfare payments by the state to supplement earnings.^[11]

From 1 April 2016 the national minimum wage has been paid as a mandatory National Living Wage for workers over 25. It is being phased in between 2016 and 2020 and is set at a significantly higher level than previous minimum wage rates. By 2020 it is expected to have risen to at least £9 per hour and represent a full-time annual pay equivalent to 60% of the median UK earnings.^[12] The National Living Wage is nevertheless lower than the value of the Living Wage calculated by the Living Wage Foundation.^[13]

The payment of the Living Wage Foundation's level of Living wage is voluntary, and some organisations choose to pay it to their staff.

Studies

In 2012, research into the costs and benefits of a living wage in London was funded by the Trust for London and carried out by Queen Mary University of London.^[14] Further research was published in 2014 in a number of reports on the potential impact of raising the UK's statutory national minimum wage to the same level as the Living Wage Foundation's living wage recommendation. This included two reports funded by the Trust for London^[15] and carried out by the Institute for Public Policy Research (IPPR) and Resolution Foundation: "Beyond the Bottom Line" ^[16] and "What Price a Living Wage?".^[17] Additionally, Landman Economics published "The Economic Impact of Extending the Living Wage to all Employees in the UK".^[18]

A 2014 report by the Living Wage Commission, chaired by Doctor John Sentamu, the Archbishop of York, recommended that the UK government should pay its own workers a "living wage", but that it should be voluntary for the private sector.^[19] Data published in late 2014 by New Policy Institute and Trust for London found 20% of employees in London were paid below the Living Wage Foundation's recommended living wage between 2011 and 2013. The proportion of residents paid less than this rate was highest in Newham (37%) and Brent (32%).^[20] Research by the Office for National Statistics in 2014 indicated that at that time the proportion of jobs outside London paying less than the living wage was 23%. The equivalent figure within London was 19%.^[21]

Results

By 2015, 1,300 employers with 80,000 workers had agreed to voluntarily pay the Foundation's Living Wage. Of these, 400 employers were in London with 20,000 workers.^[11] By 2016 the number of UK business paying the Living Wage had increased to 3,000.^[22] Many other employers are beginning to use the Living Wage as a benchmark without necessarily seeking accreditation.^[23]

Supporters

Ed Miliband, the leader of the Labour Party in opposition from 2010 until 2015, supported a living wage^[24] and proposed tax breaks for employers who adopted it.^[25] The Labour Party has implemented a living wage in some local councils which it controls, such as in Birmingham^[26] and Cardiff^[27] councils. The Green Party also supports the introduction of a living wage, believing that the national minimum wage should be 60% of net national average earnings.^[28] Sinn Féin also supports the introduction of a living wage for Northern Ireland. Other supporters include The Guardian newspaper columnist Polly Toynbee, Church Action on Poverty,^[29] the Scottish Low Pay Unit, and Bloomsbury Fightback!.^[30]

See also

References