News: LIVING WAGE FOUNDATION RESPONDS TO LOW PAY COMMISSION CONSULTATION 2019
Read our response, evidence and recommendations to the Low Pay Commission consultation on low pay and National Minimum Wage rates here
We address the following questions from the consultation:
3. What are your views on the current state of the labour market? Has the labour market tightened over the past year?
4. What has been your experience of wage growth and inflation in the last year and what do you forecast for the next couple of years?
5. What has been the impact of the NLW since April 2016?
6. To what extent, has the NLW particularly affected certain occupations or industries, types of firms (small, large etc), regions or groups (for example women, ethnic minorities, migrant workers etc)?
Our response to question 3,4, and 6 highlights that:
- In the current UK labour market, 17.8% of jobs are low paid - as as calculated based on two-thirds of median hourly earnings. While this percentage has been falling year on year, the number of jobs paying less than the real Living Wage – calculated based on what people need to live and currently £10.55 in London and £9 in the rest of the UK – has risen in recent years and is currently at 22%, or almost 6 million UK jobs.
- Additionally, insecure work is a major problem affecting the UK labour market; over 5 million people who earn less than the real Living Wage are in a form of insecure work
- Low pay particularly and disproportionately impacts certain sectors, regions and groups in the labour market, such as Bar Staff, Waiters and Waitresses, Sales and Retail Assistants, Northern Ireland, East Midlands and Wales, Those working part-time, 18-21 year olds, Disabled people, BAME and Women. You can see full stats in the response here.
- Since the introduction of the ‘national living wage’, the number of employers choosing to go further than the legal minimum by paying the real Living Wage has more than doubled.
- Employers who voluntarily pay the real Living Wage report benefits for both their employees and the employers themselves. 93% of Living Wage employers have seen a benefit as a result of becoming accredited with the Living Wage Foundation, and 86% feel it has enhanced their reputation.
- If a quarter of low paid workers in ten UK city regions moved up to the real Living Wage, Over 500,000 workers would receive an average annual pay rise of over £1,700. Looking at specific regions, if 25% of low paid workers were uplifted to the real Living Wage, Greater Manchester’s economy would grow by £53 million, London by £294 million and the West Midlands Combined Authority by £51 million.
While paying the real Living Wage is the most important step an employer can take to alleviate in-work poverty, the Living Wage Foundation is this year launching a new programme to help tackle insecurity of hours. As highlighted in the Taylor Review, flexibility in the UK labour market can have adverse impacts on the workforce where it is one-sided and leaves employees to bear all the risk of their employment. By committing to the Living Wage Foundation’s new standard, Living Hours, employers can ensure their employees are able to plan their finances and play a part in their family life while also demonstrating their commitment to being a responsible business and part of their local community.
Our response to question 5 shows that:
- Since its introduction in April 2016, the government’s ‘national living wage’ has led to a pay rise for millions of people. New research shows that this hasn’t, as some feared, led to a reduction in employment for lower-paid groups.
- There are still six million jobs in the UK paying less than the real Living Wage, which is independently calculated based on what people need to meet their basic needs and fully participate in society.
- Full-time worker earning the government’s ‘national living wage’ currently earns over £1,500 a year less than they would on the real Living Wage – equivalent to over a year’s average gas and electricity or three months’ average rent.
- The number of employers paying a real Living Wage has more than doubled to 5,300 since the government’s higher minimum wage for over 25 year olds was introduced in 2016 – and in recent years the campaign has seen a major breakthrough in low paying sectors such as retail and hospitality.
We support a strong government minimum wage and welcome any attempt to close the gap with the real Living Wage. We also believe that policymakers, government bodies and other stakeholders have a role to play in encouraging more employers to go beyond the letter of the law where possible, by becoming accredited Living Wage employers, and we recommend that the Government becomes a real Living Wage employer.