The Living Wage: The Next Fair Trade?

Wendy Kyla, Birmingham City Council Summer Placement Intern, comments on future Living Wage coverage  in light of the recently released Work that pays: The Living Wage Commission Final Report . Currently an undergraduate student of International Relations with French at the University of Birmingham and usually analysing poverty in the context war and conflict-afflicted countries across the world, Wendy gains insight on the different face of poverty found amongst working people in the UK. 

A million more by 2020

Considerably higher than the National Minimum Wage at £6.31, the Living Wage is currently set at £8.80 in London and £7.65 across the rest of the UK. Unlike the National Minimum Wage, it is voluntary for employers to adopt.

Considerably higher than the National Minimum Wage at £6.31, the Living Wage is currently set at £8.80 in London and £7.65 across the rest of the UK. Unlike the National Minimum Wage, it is voluntary for employers to adopt.

An ‘ambitious but credible’ target  has been set by the The Living Wage Commission – an independent, 12-month inquiry made up of leading figures from business, trade unions and civil society that investigate the future of the Living Wage campaign – calling the government to bring an additional 1 million employees under the Living Wage by 2020.

Although gaining traction as one of the solutions to in-work poverty and a growing campaign and increasing membership, 5.2 million employees in UK are being paid below Living Wage leaving much scope across both the public and private sector for an increase of Living Wage coverage.

One of the loudest arguments amongst those who resist a universal Living Wage, is that increasing wage bills are expensive for smaller businesses and lead to redundancies. So how does the Living Wage campaign increase coverage in the private sector against these challenges, without compulsion or legal obligation? By becoming the next ethical movement.

Would consumers be looking out for this kitemark? Would it signify; fairness, community, encouragement and celebration for consumers?

The Kitemark 

The report recommends the Living Wage campaign to emulate a strategy similar to Fair Trade movement. This could potentially become the next popular ethical movement for businesses and consumers, whereby accredited employers would proudly boast their kite-mark representing their action in valuing the individuals that make up their workforce. Consumers would then be able to identify which businesses are Living Wage accredited and make better informed consumer choices.

In contrast to the familiar image of supporting coffee bean workers in the Amazon, we would be supporting vulnerable low-income families and communities in the UK.

Similar to the way the Fair Trade logo determined which tea-bags and coffee beans shoppers opted for in supermarket aisles, the Living Wage kitemark would provide companies a ‘comparative advantage’ over others, bettering their brand and increasing their appeal to ethical consumers.

Why go Living Wage?

The campaign is centred on rewarding a hard day’s work with a fair day’s pay.

The profile of those in poverty in the UK has significantly changed: for the first time, the majority of people in poverty are working. With minimum wages and the abuse of zero-hour contracts, low-paid employees are finding it increasingly difficult financially supporting themselves and their families, contributing to a rise in the amount of people using and becoming increasingly dependant on food banks and in-work benefits.

“Low wages equals living in poverty.” – Dr Sentamu, Chair of Living Wage Commission Final Report

Surveys show that individuals that were once working multiple minimum wage jobs and still were unable to make ends meet, expressed that because their employers decided to adopt the Living Wage, they were given time to spend with their families and contribute to their communities. An increase in their pay has allowed them to feel as if they are really ‘living’ and not just surviving; valued and appreciated by their employers.

Will Nestle live up to its motto with their new Living Wage accreditation status?

Risks

Although a successful marketing strategy to strive for, the Fair Trade logo does not guarantee all of its promises. Critics of the movement question whether Fair Trade is truly fair. By paying a few extra pennies, does the Fair Trade label simply ease the mind of charity-motivated shoppers in the West rather than actually being an instrumental tool in breaking the poverty-cycle in developing countries?

The Living Wage campaign aspires to stay close to its principles with conviction- a community-led movement ‘rooted in the real lives, rather than balance sheets and statistics.’ What immediately comes to mind is the commendation of newly accredited Living Wage companies such as Nestle, the largest food manufacturer corporation, that has experienced its fair share of controversies and scandals regarding worker’s rights and unethical practices. Recently being the first of large corporations to adopt the Living Wage, could this create the image that becoming an accredited Living Wage employer pave the way towards the road of redemption?

Furthermore, could exclusive branding of Living Wage businesses as ethical potentially inadvertently punish small start up companies that are simply not able to afford paying the Living Wage?

Does this remain to be symbol of reassurance for conscious, ethical shoppers?

Although there is a desire to extend Living Wage coverage across the private sector, particularly amongst companies which would feel little impact from wage bill increases and embrace the opportunity to better their ethics image, above all, the adoption of the Living Wage should stay close to the principles of the campaign and maintain integrity. Valuing the employee and empowering low-paid workers, where community, encouragement and celebration are at the core of the Living Wage movement.

Birmingham : A Fairer City

The Commission’s report hopes these values are also shared across the public sector, illustrating how society benefits from the Living Wage.

Confronted with big city challenges, low wages across the city and child poverty rates well below the national average (more than one in three children living in poverty), Birmingham City Council already taken steps in championing the Living Wage campaign by providing a Living Wage for all council employees, as aspires to become a Living Wage city.

The Living Wage campaign has prompted councils to identify the different needs of different communities, leading to a deeper understanding and stronger mandate to carry out effective solutions to combat poverty. Alongside the Social Inclusion White Paper (which sets out the council’s commitments and recommendations to achieving social inclusion across city), the launch of the Business Charter for Social Responsibility, the formation of arenas such as the forthcoming Birmingham Child Poverty Commission, Birmingham is actively working towards becoming a fairer city.

As well as the Living Wage kitemark illustrating a potential new ethnical movement for businesses, I hope that the Living Wage campaign will continue to inspire and encourage the private and public sector to recognise their role and responsibility in pro-actively tackling in-work poverty and dismantling inequality in the UK whilst empowering individuals and supporting communities.

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.