LW logo general 300LIVING WAGE


Every worker is worthy of their hire (see Luke 10:7)

Jubilee+ is pleased to announce accreditation as a Living Wage employer. For us it was an easy decision, simple, and affordable to implement. We have very few paid staff, and in any case they were all paid above the Living Wage, currently £8.25 / hr outside London.

Why Bother?

We bothered because we appreciate the work of the Living Wage Foundation and the best way to demonstrate that was to seek formal accreditation. In doing so we add (a little) momentum to their work, and the cause of living wages.

We bothered because we believe that paying below the living wage is inherently unjust, and has a major negative impact on poverty and social exclusion.

We bothered so that we could legitimately encourage others to get on board with this act of justice. 

It’s Official

While we were in the process of gaining accreditation, the government – to the evident surprise of many - announced that with effect from April 2016 a National Living Wage will become mandatory. The level has been set at £7.20 an hour for those aged 25 and over. So a ‘living wage’ is becoming official policy. This is to be welcomed as a step in the right direction. However when we look at cost of living calculations (below), we will have to ask a question about the basis and level of the government rate.
 
The Problem

For many years the government and other agencies have defined a ‘poverty threshold’ as being a household income of 60% of median household income. (50% of UK households have incomes below the median and 50% are above.) The median for the year ended March 2014 was £24,500 pa, or about £12.25 per hour. So on this basis the poverty threshold is around £7.35 per hour. In 2012-13, around 8% of people in employment in the UK were in relative income poverty according to this measure.

Note the official terminology ‘relative income poverty’. This measure only tells about a household’s income relative to other households in the UK. It does not tell us whether that household can afford to live or not. The Living Wage Foundation seeks to address that question.

How Much and Why?

The Living Wage, outside Greater London, is calculated by the Centre for Research in Social Policy (CRSP), and a revised figure is published every November.  It’s worth looking at the calculations.  In our judgement these figures do represent the genuine minimum sustainable cost of a basic, but dignified lifestyle. There is no excess there.

The calculations are made for nine different types of household, producing a range of required ‘living wages’ from £5.70 each for a couple, to £21.10 for a lone parent with three dependants. A weighted average of these nine figures is then produced, based on the percentage of each household type in the UK. The figure resulting in November 2014 was £9.20.

However, there is also a policy of not increasing the Living Wage by more than 2% above the average annual rise in wages (to aid acceptability to employers). So this resulted in the Living Wage being capped at £7.85. This places seven of the nine family types (all those with dependents, 48% of all households) in the position where the Living Wage is inadequate. For such households, benefits and tax credits must bridge the gap.

In London the current Living Wage is set at £9.15 and the calculation is performed by the Greater London Authority. The calculation method is different and can be viewed here.

The mandatory government figure soon to be introduced is clearly lower than either of these numbers – markedly so in the case of London. But it’s a start. Hopefully over the next few years the mandatory rate will converge to the actual cost of basic living. The government has tasked the Low Pay Commission with recommending future living wage rates, with the target of aligning with 60% of median income – the ‘poverty threshold’ – by 2020.  According to Living Wage Foundation this would require a rate of around £9 an hour at that time. However we would recommend that a better basis of the rate is a cost of living calculation. A median-based calculation controls relative poverty. It reduces the gap between rich and poor. But there is no magic that ensures that 60% of median is a liveable income.

Why not?

There are many potential challenges with paying the Living Wage, and many pressures not to. Whether it is churches or charities trying to be good stewards of donations, or trying to implement a huge vision on a limited budget; or whether it is public sector organisations trying to maintain services despite budget cuts; or whether it is commercial companies trying to stay competitive in an aggressive global market: everybody wants to keep tight control of the wage bill.

But surely it is inherently unjust to remunerate someone for their time, energy and skills at less than the cost of very basic living.

So what about ‘market rate’? Surely paying the ‘market rate’ is the fair thing to do? But why should we feel the need to align ourselves with this nebulous but powerful beast called the market? What kind of a market is it if it forces people to live below the poverty line, or excludes people from some jobs on economic grounds?

No good options

What are the options for someone being paid less than the Living Wage?

  • Borrow in order to make ends meet. But there is no money to service the loan, so unresolvable debt accrues – one of the major pathways to poverty.
  • Work more hours than a normal 40-ish hour week. This clearly has significant lifestyle consequences – particularly in terms of health, leisure and time to engage with friends and family. To choose to work extra hours in order to increase living standards is one thing, but it should not be necessary in order to sustain a minimum acceptable standard. (For many, extra hours are not available from their employer.)
  • Live in substandard or overcrowded accommodation.
  • Live on a poor or insufficient diet.
  • Resort to crime in order to bridge the gap.It is surely testament to the value many place on having paid work that so many are prepared to work for so little and risk falling into poverty.


And surely no employer should force an employee into any of these forms of poverty and social exclusion by simply not paying them enough.

Neither does it make sense for benefits to be necessary to ‘top-up’ the income of those in full-time work but being paid below the living wage – especially for those in the lower-cost household types. That is a taxpayer subsidy to employers.
 
For God’s sake, bother

We bothered, and we’d encourage you to do the same. Let’s lead the way in establishing the living wage as the minimum acceptable rate of pay for everyone.

If you’re an employer then you can easily exercise influence. But even if you’re not, there are ways to encourage your church, or the charity you support, or the supermarket or high street clothes store where you shop. (By the way, well done Lidl and Morrisons.) Of course getting employers to pay a living wage is the key thing, but why not join up with the Living Wage Foundation and be part of the visibly growing pressure towards liveable wages for all workers?

A living wage for all may not be a total panacea to poverty, but it would significantly reduce the number of working poor. That a rich nation like the UK does not pay every worker enough to live on is shameful, unjust, and exploitative. It dishonours God and dehumanises his image bearers.

So for God’s sake, let’s all bother.


Andy McWilliam, 02/11/2015


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