Going further

In 2001, families in the East End of London came together with broad-based community organisers working for Citizens UK, the sister charity of the Industrial Areas Foundation which trained Barack Obama. Citizens UK brought together people from all walks of life and asked them what issues were affecting their communities. From this meeting, the living wage campaign was born and 16 years on over half a billion pounds has been redistributed voluntarily from businesses and employers back into the pockets of those struggling to get by on the minimum wage.

It is hard to argue with the basic premise that a ‘hard day’s work deserves a fair day’s pay’, but where early campaigners had such an impact was in urging businesses to recognise their outsourced staff – like cleaners, security guards or temporary events staff – as part of the successful running of their business. These crucial outsourced workers can be invisible to the company – often wearing different uniforms from directly employed staff and working while everyone else is asleep. But this invisible workforce is where we see so much of the UK’s low pay: 75 per cent of all catering and kitchen assistants and 70 per cent of all cleaners are paid below the real living wage.

That’s why a central feature of living wage accreditation is that employers must pay the independently calculated rate to all contracted staff who work on site, as well as to their directly employed staff. It’s in these jobs that the campaign for the living wage has really shone a light on the plight of those trapped in low pay. Some progressive local authorities have responded by bringing once outsourced workers back in-house. To build a pipeline of supportive partners in the outsourced industry itself, the Living Wage Foundation set up the recognised service provider scheme. It celebrates service provider companies which offer a living wage bid alongside every market rate submittal to their clients. This puts the onus back on the client to consider those invisible workers cleaning their offices. It is also a pathway to becoming a living wage employer for companies in some of the lowest paid sectors. This simple solution has seen a pay rise for more than 17,000 of the lowest paid workers in the UK.

There has been a lot of debate on the issue of mandating the living wage in public contracts. The posted workers directive states that any contract which involves workers being posted from one EU member state to another cannot require wages to be set above the national minimum wage. The reason for this is that companies based in member states with low wage economies have a competitive advantage when bidding for contracts in member states with higher wage economies: workers from Poland will often be willing to go and work in Germany for lower wages than theworkers in Germany would accept and this gives Polish companies the ability to offer lower prices, making it more likely they will win the contract.

However, although the law makes some sense in continental Europe with its land borders and close proximity, when we’re talking about a cleaning contract in South Lanarkshire, it’s extremely unlikely that workers would ever be sent from other parts of the EU – so why does any of this matter? The directive is broad enough that it can be interpreted to include a contract even where there is no cross-border element i.e. nobody is actually posted from one state to another.

The legal consensus seemed to be that any public body that stipulated the living wage as a requirement in a tender exercise would run the risk of being challenged. However, the Scottish government has shown that there is a way around the problem: it published guidance recommending that any public body should include a question in their tender exercise on fair work practices. Bidders are then required to list the ways in which they implement fair work practices, including the living wage, and their answers are scored. This means that any bidder which pays the living wage will get credit for doing so and will be more likely to win the contract. This is a huge step forward and has led to a significant increase in the number of workers paid the real living wage in Scotland.

The case for the living wage is not just a moral one. It is often said that workers in the UK are not as engaged or productive as their European counterparts – it takes us five days to produce what Germany makes in four. So much of the productivity debate is focused on the emergence of new high-skilled sectors like artificial intelligence and the e-motor industry, but the real lack of productivity is found where there’s widespread low pay.

When we surveyed our living wage network the businesses with the highest number of low-paid workers reported the most significant benefits: 76 per cent of large organisations reported improved recruitment and retention; 78 per cent reported an increase in staff motivation. Staff who are paid a wage they can live on feel respected and motivated at work. Absenteeism and staff turnover decreases which reduces recruitment and training costs, directly impacting the bottom line.

Our movement of responsible employers is growing year on year but with over 20 per cent of the UK workforce still earning below the real living wage, including nearly a third of all working women, the job isn’t done. Now, more than ever, businesses that can afford it should pay all their staff a real living wage.