A wage you can live on; surely that is not too much to expect in return for full time work?
Studies have shown that once someone earns enough to pay their bills and pay for a few small pleasures their happiness peaks. In other words happiness does not directly correlate to the size of their wage packet once that wage goes above an amount they can comfortably live off.
As an employer we made a commitment to pay the Living Wage three years ago and have witnessed first-hand the benefits.
First let me clarify, I am not talking about the National Minimum Living Wage that the Government introduced in April 2016. I am talking about the rate that the Living Wage Foundation calculates, according to the basic cost of living in the UK, as an amount that people can realistically live off. In practical terms, this is £7.20 and £8.25 (£9.40 in London) per hour respectively for the current year and is recalculated annually.
The new rate of £8.45 for the UK and £9.75 for London and was announced this week.
So why did we do it?
We felt it was the right thing to do; for our employees, for our business, and for society. Yes, it was a cost that came straight off the bottom line, and no, we did not increase the fees for our service to cover it. We could, however, afford to do it and so for us it was more a question of why wouldn’t we?
It is a choice not every business can afford, but for those than can, I believe it makes great business sense…
- Attracting and retaining the right people is easier, particularly as we want to attract, develop and grow our talent.
- Our people have less to worry about as they can more easily pay their bills. This was evidenced through our employee surveys (fair pay fell much lower in the list of what is important to them). Our conversations became more about how they could do better in their work as opposed to how they could earn more money
- People were happier to stay in a job they enjoyed as the pressure to progress (and earn more) was removed
- Conversations about attitude and ability were much simpler as they were less about pay.
- Our business has a more secure long term future as our good people stay – a driver to leave (more money) has been removed
- The annual pay rise is less emotive in that the increase is determined by the Living Wage increase. Our decision is whether or not to apply the increase across the board or not
I would encourage any business, particularly if people are your greatest asset, to, at the very least, look at introducing (or working towards) paying the Living Wage.