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Tackling the Problem of Low Pay in Britain
Care 2
Emily L.

November 23, 2011
View the Original Article

NOTE: This is a guest blog post from Matthew Butcher of FairPensions.

A Living Wage is the minimum hourly wage required for housing, food and other basic needs for an individual and their family. Within London it is decided each year by the Mayor’s office and is currently £8.30. For the rest of the country, the Centre for Research in Social Policy at Loughborough University has calculated a single rate which is £7.20 per hour. The National Minimum Wage, on which 684,000 people survive, is £6.08 per hour.

The working poor make up a surprisingly, and worryingly, large proportion of the workforce in this country. According to a report by the Resolution Foundation 20% of all employees earn less than a Living Wage. Inflation, currently hovering at around 5%, is hitting Britain’s low paid millions very hard. Meanwhile companies such as Intercontinental Hotels, Capita and Barclays continue to make hundreds of millions of pounds in profit, at the very least. The wage ratios between CEO pay and average pay in Britain’s biggest companies have in recent times been up to a staggering 1374:1.

Though the inequality between high and low earners certainly highlights the case for a Living Wage, it is the struggles faced by those on low pay and their families which tend to motivate campaigners. Growing up in families with low paid parents has effects on children for the rest of their lives. Of the 2.8 million children in the UK living in poverty in 2008/9, a shocking 59% of them have one or both parents in work. Children who grow up in poor households are, according to the Marmot Review, more likely to be affected by obesity, heart disease and mental health problems. Children from low income families are also less developed by the time they reach school age.

Older children, especially those at secondary school, also face great anxiety if they appear poorer than their peers. A worker for one of Britain’s biggest companies who preferred not to be named said: “I feel like I’m a disappointment to my kid because I see what other parents get their kids and I can only just afford to keep us warm and fed.” Another effect of low pay on parents is that they are forced into working two or even three jobs and have less time to spend with their kids. A cleaner at Marks and Spencers, working for a contractor, described her shifts: “I work 7 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 2 hours one way to get to work. My morning shift is only 4 hours.”

When Britain’s biggest listed companies fail to pay Living Wages it is taxpayers who help workers make ends meet. Low paid workers often rely on government tax credits to ‘boost’ their income. These tax credits, which are vital for workers, effectively represent a taxpayer funded subsidy to FTSE 100 companies. With increasing concern over cuts to public spending questions must be asked as to whether this subsidy for corporations represents an equitable sharing of the burden.

Paying a Living Wage is not only good for workers but also for employers. Living wages have already been adopted by organisations all over the country, including The NHS in Scotland, KPMG in London and many universities. In the last 10 years the application of Living Wage standards has lifted 8000 people out of working poverty in London alone. 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.”

Taking Action

The problem of low pay in Britain is by no means a new one and the bad news is that it is getting worse. In the five years between 2004 and 2009 the number of poor children in a household with at least one worker grew by 25%. The good news is that people can now do something about it.

In May FairPensions, along with their union partners and backed by investors worth over £13 billion, launched a campaign aiming to embed Living Wages in the FTSE 100. At AGMs up and down the country board members have be asked to pay workers decent wages, and many of them have agreed to meet with us. In some companies there seems to be a genuine appetite for change while in others there is clearly a lot more work to be done.

Members of the public can add their voice to the campaign for Living Wages and take action online. FairPensions’ Living Wage action tool 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.