We should all be pushing for the Living Wage

This International Workers’ Day (1 May), Klara Skrivankova who heads up our Better Work funding programme argues that the Living Wage, which is calculated based on the cost of living, has never been more needed as we emerge from the COVID-19 crisis.

Workers in London’s most deprived neighbourhoods have been hit the hardest by unemployment during the pandemic.

This is not a surprise. Even before COVID-19, the number of people with jobs living in poverty has been rising. The 2020 public health crisis shone a light on another epidemic that has quietly spread over the past decade: in-work poverty. Before the COVID-19 pandemic 51% of Londoners in poverty were in work.

Over the same period unemployment in London dropped by nearly 10%. The reduction in unemployment had masked the increasing numbers of workers on low pay and insecure contracts struggling to put food on the table in an expensive city.

Now unemployment is rising again. Much of it is ascribed to COVID-19, but it is expected to be topped up by the effect of Brexit in 2021. With the focus on rebuilding the economy, we have an opportunity to fix the pre-pandemic race to the bottom in the labour market.

The case for the London Living Wage

Increasing the number of workers who get paid the real Living Wage is one of the ways to do that. Living Wage, unlike the national minimum wage, is based on the cost of living and voluntarily paid by nearly 7,000 employers in the UK. In London it stands at £10.85 per hour.

Critics argue that in crisis Living Wage is not affordable and push for job creation as a priority. Yet, the affordability argument tells us more about business values than whether profit margins allow for decent pay to workers. Share Action’s recent analysis of low pay in the retail sector shows that some supermarkets known for their low prices, like Aldi, have been leading the way in paying the real Living Wage.

A fair wage is often the distinguishing factor between decent work and an in-work poverty trap.

And it does not exist in a vacuum.

Better paid workers have better living standards and the extra money they can spend goes back into the economy.

Paying workers fair wages and ensuring good working conditions also makes business sense. Living Wage Foundation's accredited employers report better staff retention, improved workplace relationships and increased business reputation.

Investors also increasingly pay attention to how companies treat workers. In March 2021 Deliveroo’s shares plummeted on its first day on the London stock exchange after major asset managers announced that they would not be buying the company’s shares over workers’ rights concerns.

The lessons of 2020 support the argument for the Living Wage. As working conditions and fair pay become considerations in recovery investment packages, Living Wage may not just be the right thing to do to support people experiencing in-work poverty, but a fundamental element of sustained commercial success.

30 April 2021