In recent years, the National Minimum Wage, or as it’s sometimes known the National Living Wage, has increased regularly and had a huge impact. But advocates of the real living wage would argue that those paid the National Living Wage have missed out on billions compared to if they had been paid the Real Living Wage.
Somewhat confusingly, the Living Wage is not the same as the accredited Living Wage, sometimes referred to as the ‘Real living wage.’
The Real Living Wage is the rate set by the charity, The Living Wage Foundation, who continue to do sterling work. I was proud in a previous role to be one of the first companies to implement this and to win the Living Wage Champions Award for the region, despite the company being based in one of the lowest paid counties in the UK.
With inflation rising to its highest level for 40 years, and a sudden increase in interest rates after years of relative inactivity, here we are several months into a cost-of-living crisis, which is impacting businesses and their people every day.
MP’s have recognised this and have recently set out recommendations to tackle in-work poverty. A cross party group has been set up and they have concluded, amongst other things, the following:
- Parents were suffering more than others
- Instability can be caused by insecure work
- Bringing forward of the Employment Bill
- Improving Flexible working policies
- The Government will commit to pay the Real Living Wage, setting an example for others across the country.
You mean they don’t already?
There is always a bigger picture to consider when understanding the pros and cons of these recommendations and it’s easy to criticise.
For instance, as much of a fan as I am of the Living Wage Foundation, and I really, really am, within a business it can cause issues. For instance, by moving your lowest paid workers up each year, you potentially close the gap on other workers delivering more valuable work where traditionally there was a larger differentiation of salary too. This can be deemed to be demoralising, with your only real alternative being to move everyone, or most up, which for most businesses is unsustainable.
It also doesn’t take into consideration household income. By setting a target to remove in work poverty, we’re assuming that an individual is suffering if we don’t pay the real living wage, when in reality they could be living in a very wealthy household. I’ve met people who don’t need to work, but who want to, who definitely are not suffering in-work poverty.
These are nuanced issues, and it should not detract from the vast number of people who do need this and would benefit.
When we assess the rest of the recommendations, it’s no surprise that parents are suffering more. It’s an expensive pursuit, with reports suggesting that it costs around £100,000 to raise one child.
One of the recommendations is to bring forward the Employment Bill, which has been delayed multiple times now. This in itself will impact flexible working, but with the instability within Government, the ongoing impacts of Brexit and the war in the Ukraine, this doesn’t feel like a priority right now.
So what can businesses be doing?
The fact that the recommendations provided by the group, and indeed the fact that the details of the Employment Bill are known, means that businesses can get ahead and put these in to action. They don’t need to wait. We get lots of queries about best practice and lots of ‘benchmarking’ requests. That’s a fantastic start, however this works best if you have a strategy in place and understand the context. A query won’t get you this, but instead putting the hard yards into a solid plan and getting the right expertise, insights, and support – that’s what will get you that.
Businesses right now have an insight in to what the Government are likely to impose, they have a set of tools and analysis that could help with attraction and retention. If they couple this with what is unique about them, with expert HR support on what can help differentiate them and make them sticky, then they have a plan in place and willing and able partners to make a difference to their pain points right now.
Can businesses afford to wait any longer? Why would they want to? With many businesses we are talking to and from asking what other businesses are doing, this seems like an ideal opportunity to get ahead before these changes are enforced, whilst looking at what else their own businesses could do with our help.
If you’d like to talk to us about how we can help you to get the right strategy and support in place, visit our HR support services landing page, or you can complete the form below. Alternatively, call us on 01491 414010.