A Living Wage – why it’s good for business

Evidence shows that 35 per cent of children in Birmingham live in poverty.  Many of these children are living in families with at least one parent in work, so any improvement in wages will have a positive impact on child poverty in the city.

Birmingham City Council took action to help its lowest paid workers by introducing a Living Wage in July 2012. In April 2013, the council launched the Birmingham Business Charter for Social Responsibility, which aims to boost the local economy by maximising the social value that the council gets from its purchasing power.

One of the six key principles of the charter to be followed by organisations adopting it is to be a good employer by supporting staff development and welfare and adopting the Living Wage.

The Social Inclusion Process White Paper, Making Birmingham an Inclusive City, welcomed the city council’s Living Wage policy and supports the principles in the charter, urging other bodies to “use their influence and expertise to promote this more widely within the business community”.

Social responsibility expert, Carole Parkes, from Aston University – itself a supporter of the Living Wage – provides a business case as well as a moral argument for introducing poverty-relieving pay packets in her article for the Chartered Management Institute magazine, Professional Manager, in February 2014.

Carole says that looking at the issue of low wages from a purely economic perspective is to ignore an important tenet of any civilized society – that it is judged by how it treats its most vulnerable citizens.  But, she argues, if “doing the right thing” is not enough, evidence suggests that paying the living wage reduces absenteeism, turnover and subsequent recruitment and training costs and increases productivity. It is, indeed, good for business.

To read Carole’s article, click here.

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