Some local authorities have joined the campaign for a living wage – but why not all of them? It could give councils an opportunity for tangible community leadership on an issue of great concern to their citizens
The campaign and enthusiasm for promoting and implementing a ‘living wage’ policy are gaining momentum.
This week is Living Wage Week, with events taking place in London, Cardiff, Edinburgh, York, Glasgow and Birmingham. Employers who support the initiative guarantee to pay an hourly rate of at least £8.55 in London and £7.45 in the rest of the UK. These rates, announced today, should enable employees to earn enough for them and their families to have a decent, if basic, standard of living.
As recent reports from the Institute for Fiscal Studies and Resolution Foundation have demonstrated, it would benefit the Treasury too. A national commitment to a living wage would save the Treasury £1,000 per employee who is paid this wage – for example, in terms of less expenditure on tax credits and increased tax take. It would significantly reduce taxpayer subsidisation of employers willing to pay low wages, and it would increase consumer expenditure on high streets and in local economies.
Trade unions, charities, the civil services, local authorities (including the Mayor of London) and many businesses are already implementing the living wage and many of them are requiring their suppliers to do the same. However, many – too many – local authorities and the majority of businesses and charities have still not adopted a living wage policy. This must change.
Local authorities are in a powerful position to promote and extend the reach of the living wage. They can act in a number of ways including: as employer of some of the lowest-paid staff in the country; as a large-scale procurer of goods and services from the business, social and third sectors; and as local community leaders.
A number of local authorities are already acting on one or more of these approaches – but why not all of them? Some argue that the current public expenditure pressures and the consequential cuts make a living wage unaffordable. This is short-sighted and logically would lead to a call for the abolition of the minimum wage. It fails to take account of the wider impact on public expenditure or wider social consequences. It also shows a fundamental lack of respect for their staff.
Local authorities should consider an eight-point plan to promote the living wage:
- adopt the living wage for its employees, including any agency and part-time staff
- require all suppliers (in all sectors) of their goods and services contractually to adopt the living wage; and, in turn, to require the same to apply throughout their supply chains
- seek to renegotiate current contracts that are not compliant with this approach as far as is possible and in ways that minimise the impact on the local authority’s funds
- ensure that when procuring services from the business, social and third sectors the payments are sufficient to enable contractors to afford at least the living wage for their employees and those of their suppliers
- apply the same approach to any grant-aid payments to the local voluntary and community sector
- use their community leadership role to persuade other public sector, local business, social and third sector employers to adopt the living wage
- introduce a ‘local kite mark’ for employers that adopt the wage so that local businesses and consumers can make choices about whom to do business with
- explain to local citizens, businesses and taxpayers the social, economic and fiscal benefits of the living wage generally and specifically in terms of the local authority area
Local authorities of all political persuasions across the country are showing leadership on this issue. Some government recognition for this would be most helpful and the costs ideally should be reflected in future local government financial settlements.
Some, such as David Miliband and Dave Prentis in The Observer have argued that local authorities should be receive some of the savings arising to the Treasury to fund local skills funds. This is a good idea but even without such incentives, local authorities should and can show leadership and pursue the kind of policies that I have proposed.
Local authorities can work on a living wage initiative with local trade unions, business, the wider public sector, schools and colleges, and the voluntary and community sector to create a place-based campaign and action. It could be a tangible example of community leadership.
Of course, the living wage is not the only economic and social weapon required to fight poverty, disadvantage and social injustice – but it is an important one. And what is more, the one of the moment.
