By Richard Johnstone | 4 November 2013
Local government trade unions have reiterated their call for all councils to pay staff the Living Wage as the annual uprating of the hourly rate was announced today.
The Living Wage Foundation increased the rate by 20p to £7.65 per hour, while the level applying to London has also gone up by 25p, to £8.80 an hour.
As the new rates were announced, both the GMB and Unison said councils should start paying them. The unions have submitted a pay claim to local government employers calling for a £1 pay increase across all grades, which would ensure all council staff are paid at least the Living Wage.
Brian Strutton, GMB national secretary for public services, highlighted that 117 councils already pay the Living Wage. If all authorities were to do so, then 250,000 low paid workers would be given a pay rise, he said.
‘The benefits also spread to local communities – council workers spend more than half their earnings in their local area. Councils also benefit as employers, with lower staff turnover and higher morale bringing savings and improved services so that the policy makes sense, even in the wake of the government’s cuts to council funding,’ Strutton added.
Unison claimed the introduction of the Living Wage across the country – in both the private and public sectors – would create an estimated 58,000 new jobs.
The finding, from a study of the possible impact of the extra cash paid in wages by Landman Economics director Howard Reed, illustrated the potential for a ‘virtuous cycle’ of economic growth, the union said.
This is created by the ‘multiplier effect’ of higher wages. As more people are paid the Living Wage, they have more money to spend in local shops, boosting local employment. Tax revenues paid to the Treasury increase, and spending on benefits falls, Reed’s analysis found. If these savings were the used for tax cuts or public spending increases, the UK’s gross domestic product could increase by between £5.6bn and £10.7bn.
Unison general secretary Dave Prentis said that, with 4.8 million people earning less than the Living Wage, there was a need for ‘a solution that fits the size of the problem’.
He added: ‘Paying the Living Wage is the right thing to do and is a win-win scenario, stimulating the economy through increased consumer spending and saving taxpayers’ money by cutting benefits. It would also help to close the gender pay gap that still remains stubbornly high. Why should taxpayers be subsiding Scrooge employers who pay poverty wages and rely on the state to make up the difference?’
The comments come after Ed Miliband pledged the next Labour government would introduce tax breaks for employers that paid the Living Wage.
Firms will benefit from a 12-month tax rebate of up to £1,000 for every worker that is moved onto the higher rate, he announced yesterday.
Ahead of a speech on the cost of living on Tuesday, Miliband said the policy would help tackle the fact that wages for millions of families have been stagnant or in decline for ‘far too long’.
