Has the new ‘national living wage’ damaged the Living Wage campaign? No — it’s thriving.
On 1 April, 1.8 million of Britain’s low-wage workers are getting a pay rise as the legal wage floor jumps from £6.70 to £7.20 for those aged 25 and over. That’s welcome news for Britain’s hard-pressed low paid.
But the decision to re-brand the newly enhanced minimum wage the national living wage has created widespread confusion, not least for those who pay the actual, higher living wage (£9.40 in London and £8.25 elsewhere). Whatever the label, a minimum wage and living wage are very different creatures.
Minimum wages are traditionally based on an assessment of what employers can afford (though George Osborne’s new version targets 60% of the typical wage) rather than the earnings a household actually needs to get by. They are enforced by law. By contrast the voluntary living wage, for those 18 and above, is set independent of government and reflects the cost of living. It is about what households need to survive and doesn’t take account of possible employment effects. That’s a big difference. Both are important and have a role to play; but they certainly aren’t the same thing.
When George Osborne made his so-called national living wage announcement last summer, many assumed the ensuing confusion would inevitably lead to the demise of the higher, voluntary living wage. Its hard-earned and highly popular brand had been raided: why, now, would any employer pay more when they could benefit from the reputational halo-effect of something that sounded very like the living wage but cost them less? A vibrant campaign was expected to quietly fizzle out.
In fact the opposite has happened. More than 800 employers have been accredited since the national living wage was announced — a doubling of the rate in the prior year. Perhaps even more importantly these new recruits include some big employers from mass-employing, low-paying sectors such as retail. Since the summer, Ikea, Aldi, and Lidl have all agreed to pay the living wage. To the surprise of many, Osborne’s announcement has galvanised the campaign and brought new interest from key employers. It’s early days but so far at least, it’s been an opportunity disguised as a threat.
Why might this be? The motivation probably isn’t too hard to fathom. Ask most people how they would like to be seen by their peers and few would respond that the pinnacle of their aspiration is to be viewed as someone who avoids breaking the law. If they did, you might look askance. Similarly, when it comes to employers some want to aim higher than mere legal compliance. In part that’s because it feels like the right thing to do for their workforce, but also because it brings direct business benefits in the form of reduced staff turnover and greater employee commitment.
None of this is to suggest complacency. The Living Wage Foundation’s campaign has moved from the margins to the mainstream at remarkable speed. Ten years ago this took the form of a handful of innovative community activists hassling a few big banks in Canary Wharf, and building alliances with faith and civic groups. Today 2,300 employers are accredited, including more than a quarter of the FTSE 100 and a range of public authorities, such as the Scottish and Welsh governments, the GLA and a fast-growing number of councils.
This rapid move from infancy to maturity brings new challenges for even the most successful campaigns. Potential employers, especially those in low-paying sectors, will rightly scrutinise the rate and what may happen to it in years ahead. Workers will want to know it accurately reflects the true cost of living. A new Living Wage Commission — consisting of leaders from business, unions and civil society — has been created for exactly these reasons.
The real challenge, of course, is that almost six million people still earn less than the living wage, many working for employers who could absorb the extra costs of paying a bit more to those who get the least. The campaign to build a real living wage economy has its work cut out.
Yes, it’s a good thing that the legal wage floor is going up significantly this week, even if the confusion over labels is a bit unnecessary. But the idea that as a result the living wage campaign is on the way out? Wrong. It’s got even more of a spring in its step.
This article first appeared on The Guardian.
