Living wage 'should go to one million more workers', report demands

The commission, chaired by Archbishop of York, Dr John Sentamu, has recommended a series of "low cost" moves to tackle low pay. The conclusions of a year-long study argue that increasing the pay of half a million public sector workers to the Living Wage could be more than met by higher tax revenues and reduced in-work benefits from a similar number of employees in private firms.

Professional service firms such as accountancy, banks and construction companies could boost the pay of 375,000 workers if they agreed to pay the Living Wage, currently set at £8.80 an hour in London and £7.65 elsewhere, compared to the national minimum wage of £6.31, said the report.

The commission is an independent body bringing together names from business, trade unions and civil society. Its definition of a living wage is "an hourly rate of income calculated according to a basic cost of living in the UK and defined as the minimum amount of money needed to enjoy a basic, but socially acceptable standard of living".

Dr Sentamu said: "Working and still living in poverty is a national scandal. For the first time, the majority of people in poverty in the UK are now in working households.

"The campaign for a Living Wage has been a beacon of hope for the millions of workers on low wages struggling to make ends meet. If the Government now commits to making this hope a reality, we can take a major step towards ending the strain on all of our consciences. Low wages equals living in poverty."

The commission says there needs to be "an even distribution" between the public and private sectors, with regards to the one million workers it envisages as being raised to the living wage. Its research shows that there are currently 558 employers across the UK accredited as paying a living wage.

Dr Adam Marshall, director of policy and external affairs at the British Chambers of Commerce, said: "The return to economic growth means that many employers are now looking again at increasing levels of pay for their employees after a tough period for business.

"Many thousands of companies already pay their employees a Living Wage, and many more have an aspiration to do so. As the recovery gathers pace, they should be supported and encouraged to make this happen without facing compulsion or regulation, which could lead to job losses and difficulties - particularly for younger people entering the labour market.

He added: "Some businesses simply cannot afford to pay a living wage just yet – which is why the commission rejected a compulsory living wage.

Mike Kelly, director and head of living wage at KPMG, said: "Organisations that can afford to, should offer staff and suppliers a wage that is enough to live on. Doing so affords people the opportunity to improve their work-life balance as they are not forced to work longer hours or hold down more than one job. Our own experience of offering a Living Wage has seen a rise in service standards and a fall in sickness costs. Not only is this good for individual morale, it’s better for business. Put simply, the cost of improving take home pay for the lowest earners will be outweighed by the benefits of improved engagement and enhanced productivity."

Research from KPMG revealed that 4 out of 10 respondents claim they will not hesitate to shop elsewhere if their preferred supplier doesn’t pay the Living Wage. 

Mike Kelly concluded "Several years ago, no one thought that the fair trade movement would lead to a change in consumer behaviour, but the reality is that customer pressure has driven changes that have made a real difference. That’s why I would like to see Living Wage accredited employers proudly displaying the Living Wage kitemark. When they do, consumers will have the choice to buy from employers who recognise that fair pay is fair play and the blueprint for lifting people out of poverty will come that bit closer to reality.”