A Living Wage for Norwich

Norwich Trades Council 2013

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Structure of hourly pay across UK jobs

• An estimated one-in-five workers across the UK are earning below the Living Wage. • This amounts to some 4.82 million people. • The largest occupational category within this is sales & retail assistants, of which there are

an estimated 780,000 people earning less than the Living Wage. • Of all workers, the highest prevalence of sub-Living Wage earners is among bar staff (of

whom 90% are below LW) and waiters & waitresses (85% below), partly reflecting reliance on discretionary tips to top up earnings in these categories.

• Elsewhere, the highest proportion of below Living Wage earners is in kitchen & catering

assistants, elementary personal services occupations and launders, dry cleaners & pressers (of these 75% are below LW).

Source: Markit estimates based on ONS figures

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Proportion of workers below the LW by region

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Eastern England

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What is the Living Wage?

£7.65 per hourIt’s optional

(as of November 2013)

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The Ask• Pay all directly employed staff the Living Wage.

• Pay all contracted staff, such as cleaners and security staff the Living Wage.

• Contract renewals to include the Living Wage.

• Contribution to the Living Wage Foundation.

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Becoming a LW employerTo become a Living Wage employer, organisations must:

• Pay all directly employed staff the Living Wage for their region• Pay all contracted staff, such as cleaners and security staff the Living

Wage• Accreditation is still possible if contractors can’t or refuse to pay the

Living Wage, provided there is a commitment to reward a renewed contract to a company paying the Living Wage rate. Milestones for this to be in agreement with the Living Wage Foundation

• Once the above has been proven, the organisation can be accredited as a Living Wage employer and use the kite mark

• Make a contribution to the Living Wage Foundation. The level of support depends on number of employees with annual fees of between £50 and £1,000.

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The Logo

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A Living Wage

‘A minimum standard of living in Britain today includes, but is more than just, food, clothes and shelter. It is about having what you need in order to have the opportunities and choices necessary to participate in society.’

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When did the UK get its first Minimum Wage?

1909

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The Father of the Minimum Wage?

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Or perhaps Father of the Living Wage?It is a national evil that any class of Her Majesty’s subjects should receive less than a living wage in return for their utmost exertions… where you have what we call sweated trades, you have no organisation, no parity of bargaining, the good employer is undercut by the bad and the bad by the worst; the worker, whose whole livelihood depends upon the industry, is undersold by the worker who only takes up the trade as a second string… where these conditions prevail you have not a condition of progress, but a condition of progressive degeneration.

Source: Hansard 1906

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‘coming up with a minimum wage that will not seriously harm the economy, and destroy jobs, will require the wisdom of Solomon — or extraordinary luck.’

1997

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“even a low minimum wage would reduce job opportunities and create major problems for wages structures in a wide range of companies.”

1995

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The Institute of Government “What has been the most successful piece of public policy in the last 30

years?” (June 2013)

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Lessons of the NMW 1

Labour Markets are not perfectly competitive and that wage floors are therefore an important way of ensuring that workers receive a fair share of the value they are creating.

For the leading work on labour market monopsony, see the work of Professor Alan Manning. For example, Manning, A., Imperfect Competition in the Labour Market, CEP Discussion Papers, DP0981 ,LSE (2010)

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Lessons of the NMW IIEmployers are adaptive; coping strategies include;

1. Boosting ProductivityCroucher, R. and Rizov, M. The Impact of the UK National Minimum Wage on Productivity by Low-paying Sectors and Firm Size Groups Middlesex University (2011)

2. Squeezing pay distributionsButcher, T., Dickens, R. and Manning, A. The Impact of the National Minimum Wage on the Wage Distribution. Low Pay Commission, University of Sussex and London School of Economics (2012)

3. Cutting non-wage benefitsAllison, N., et al. (2007) Monitoring the Impact of the National Minimum Wage. Paper for the Low Pay Commission 2008

4. Pushing up prices.Wadsworth, J. Did the UK Minimum Wage Affect Prices? Royal Holloway College, University of London (2008)

5. Squeezed ProfitsDraca, M., Van Reenen, J. and Machin, S., The impact of the National Minimum Wage on profits and prices, LSE and UCL (2005)

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Lessons of the NMW III

That the impact of the NMW on employers overheads is surprisingly small – but that it varies very widely from sector to sector.

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Average firm-level wage bill increase by industrial sub-sector

Source: Resolution Foundation.

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Who said it?

“Britain needs a government that will work with the best of British business to build greater prosperity and share it more fairly…the Living Wage is an important part of making that happen. It is an idea whose time has come.”

“…we need to build an economy where everyone has a stake; Whitehall contracts will only go to firms paying the Living Wage, while those who pay less should be named and shamed.”

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Ed Miliband

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Who said it?

“…the Living Wage is a good and attractive idea…fairness will begin to be hardwired into pay scales up and down the country”.

“…the Living Wage is an idea whose time has come”.

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David Cameron

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Who said it?

“Decent hard working Londoners deserve proper reward for their labours… and I urge others to look seriously at the benefits and join this important crusade.”

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Boris Johnson

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Who said it?

“I see a case for making the issue of poverty pay a much higher profile issue for employers, in both the private and public sector. The minimum wage is not very much... I am interested in how we use greater transparency to incentivise behaviours which would… save the taxpayer some of the considerable amounts of money currently spent subsidising lower pay.”

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David Laws

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Who said it?

"We have got to enter into a different kind of workplace. For a very long time, five or six years, wages have been suppressed in low wage sectors. I am sending a signal that we are entering a very different environment…[I will] press for an increase in the minimum wage…[and will] ask the Low Pay Commission to restore its value, which has fallen in real terms by 10-12% since the crash of 2008.”

Sept 2013

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Vince Cable

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The Daily Telegraph I

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The Daily Telegraph II

‘I'm not saying that statutory introduction of a living wage would be without its downsides. The most serious of these is that it would be inflationary… But if phased in over time, the long term economic impact on domestic demand would be overwhelming positive.’

December 2013

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Conservative Home, 2013

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Who said it?

“In the rush for profit, and for high pay at the top, too many companies have forgotten the basic moral imperative that employees be paid enough to live on.”

“The scale of low pay in Britain is a national scandal. Come pay day, nearly five million people in this country won't have been paid…enough to live on. Just think about that.”

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John Sentamu, Archbishop of York

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Who said it?

“All my employees are already paid the Living Wage - [It's] an area in which [we have] really made a useful social contribution, a really useful one… it’s something we should be shouting about.”

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Justin Welby, Archbishop of Canterbury

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The State Subsidy to business

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Predistribution; Miliband’s Big Idea

“The redistribution of the last Labour government relied on revenue which the next Labour government will not enjoy. The option of simply increasing tax credits in the way we did before will not be open to us. We need to care about predistribution as well as redistribution. Predistribution is about saying:We cannot allow ourselves to be stuck with permanently being a low-wage economy.”

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Strategic Reasons

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Public Opinion I

83% of working people think the current Minimum Wage isn’t enough to meet living costs.

Source: Survation 2012

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Public Opinion II

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Public Opinion III

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Public Opinion IVPony Polling?

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Would you support a Living Wage being made mandatory even if it cost jobs?

Poll on Living Wage as legal minimum shows:• 71% of Labour voters• 66% of Lib Dems • 44% of Conservative voters• 60% overall• Majority support across all regions and social

classes. (Poll data: Survation, 2013)

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The Polling

Three quarters of working people (74%) would be "more likely" to buy products or services from a company that pays its workforce the Living Wage rather than the Minimum Wage.

Source: Survation

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Would you support the Living Wage even if it meant you paid extra?

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Name the brand

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Created in 2002; recognized by 77% of UK consumers by 2011

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GlobeScan survey

2011 - A comprehensive global study of 17,000 consumers carried out for Fairtrade International by international opinion research consultancy GlobeScan also showed that Fairtrade is the most widely recognised ethical label globally. Nearly six in ten consumers (57%) across the 24 surveyed countries have seen the FAIRTRADE Certification Mark, with highest recognition in the UK (77%).

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UK sales of Fairtrade Confectionery Chocolate

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On the bandwagon

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Why do we buy Fair Trade?

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Why do we buy Fair Trade?

It’s a brilliant phrase. It’s trade. It’s fair. Q: What’s its opposite?A: Unfair trade.

And so with the Living Wage: Q: What’s the opposite of the Living Wage?A: Poverty Pay

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What’s the link?

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Workfare

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Heating or Eating?

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Business and Energy Minister Michael Fallon said he was "disappointed" by SSE's decision to increase energy prices.

We're sorry we have to do this," said SSE's Will Morris. We've done as much as we could to keep prices down, but the reality is that buying wholesale energy in global markets, delivering it to customers' homes, and government-imposed levies collected through bills - endorsed by all the major parties - all cost more than they did last year.

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Scottish and Southern, Sept 2013

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Unemployment effects of the minimum wage in the U.S.

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European data (correct as of November 2013, assuming 35 hour week, euro/sterling exchange rate of 0.84)

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“We find little evidence of disemployment effects once we allow for geographic-specific trends. Indeed, in many sectors the evidence points to modest (but robust) positive employment effects.”

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Arindrajit Dube, T. William Lester, and Michael Reich, November 2010

“…considering all local differences in minimum wage policies between 1990 and 2006. We compare all contiguous county-pairs in the United States that straddle a state border and find no adverse employment effects…Our findings are robust to allowing for long-term effects of minimum wage changes”.

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Unemployment effects of the minimum wage in the U.S.

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Recruitment and retention of staff

• Up to 18%+ lower rates of staff turnover• “Substantial” cost savings on recruitment and

induction training• Higher quality of applicants• Better retention• Other knock-on benefits• All but one reported a positive impact and two

thirds a ‘significant impact’

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Absenteeism and productivity

• Up to 25% lower.• Better work continuity. • Two thirds reported an increase in

productivity.• Widespread efficient work reorganisation.• More than 80% believed work quality had

improved.

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Morale and reputation

• ‘Significantly’ boosted morale reported by all.• Reputation benefits reported by all. • 70% of both buyers and suppliers believed

that the LLW had increased consumer awareness of their organisations commitment to be an ethical consumer.

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Downers?

• Maintaining pay differentials.• Renegotiating employee and/or external

contracts – expensive and time-consuming.• Ensuring contractors pay LW.BUT• ‘ALL Buyers and Contractors reported that

they would – if facing the same choice today – implement the LLW.’

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View from a contract buyer

“I honestly believe that if you’re a reasonably sized organisation, you can make the transition from a non-living wage to a living wage providing that you look at it as a road map... Give yourself time to assess where you can make efficiencies... If you give yourself a period of time to review your cost base and understand how you can take a longer term strategic approach to it, I honestly think it’s achievable in most organisations.”

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Wills, J,. Kapko, N., Begum, R., The business case for the living wage: The story of the cleaning service at Queen Mary, University of London. Queen Mary, University of London January 2009

“While the real and estimated costs for the service had risen slightly above those involved in the past, these increases were marginal and the Chief Administrative Officer declared himself to be “perfectly happy” with the cost rises so far.”

“…research has revealed that the move to be a living wage employer and bring the cleaning service in-house has stimulated improvements in job quality, productivity and service delivery, with very little increase in costs."

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Steps in a Living Wage Campaign