Katherine Chapman & Muniya Barua: It makes sense in every way for London employers to pay the London Living Wage

Katherine Chapman & Muniya Barua: It makes sense in every way for London employers to pay the London Living Wage

Tomorrow, the government’s statutory National Living Wage will jump to £10.42 an hour, an increase of 9.7 per cent. Only a few years ago such a steep rise would have been unthinkable and gone a long way. But although it will be welcomed by families having to chose between putting food on the table and keeping their houses warm – and comes soon after the Chancellor set out further support in his budget, including the energy price guarantee extension – many working households across the capital will still be struggling financially amid the most difficult cost-of-living crisis in a generation.

There remains a gap between even the coming substantial National Living Wage hike and the rising cost-of-living, especially in London. This makes the commitment of those employers in the capital who pay the London Living Wage, the independently calculated Real Living Wage adjusted to reflect the higher cost of living in the capital, even more important. This has been set at £11.95 an hour since September – significantly higher than even the new legal minimum.

Unemployment and in-work poverty in London have consistently tracked close to or above the national average for many years. Data from the Joseph Rowntree Foundation shows that one in six working-age Londoners living in a working household are classed as living in poverty. For children, the picture is even worse, with two in five of them living in poverty across the capital, according to The Childhood Trust. And there are stark disparities for London’s ethnic minority population, with just over a third (35 per cent) living in poverty compared with 19 per cent of white Londoners, according to Rowntree.

Many firms in London are already doing their bit to help in various other ways. A recent BusinessLDN survey of more than 1000 employers showed that two-thirds of them are offering extra support to staff, outside of pay. This includes flexible working, mental health support, supermarket vouchers, free or subsidised food and help with travel costs.

But paying the London Living Wage is the single most powerful intervention businesses can make to help the lowest paid in society. It also makes good business sense. That’s why BusinessLDN is proud to work with the Living Wage Foundation to make the business case for firms that can afford to do so to pay the London Living Wage as part of a drive to make the capital a living wage city.

A study by the Living Wage Foundation with Cardiff Business School found that nine out of ten businesses which pay the London Living Wage said doing so has improved its reputation as an employer and almost two-thirds (63%) believe it has helped differentiate them from competitors.

It also helps in other ways. Of businesses paying the rate, 60 per cent said it has made it easier to take on the people they need and 58 per cent said it has improved staff retention and the motivation and commitment of those employees. A further 55 per cent say it has enhanced the quality of job applicants and made the organisation more attractive to graduates.

It is clear that paying the London Living Wage gives businesses the edge. Even so, one in seven of London’s workforce – some 575,000 people – are still paid less than that rate. At a time when businesses are facing a skills shortage and struggling to fill open vacancies, being a London Living Wage employer can help attract and hold on to candidates from a wider pool and, in the process, make a real dent in reducing in-work poverty. We encourage all businesses in the capital who can afford to pay the real Living Wage to do so.

Katherine Chapman is the Director of the Living Wage Foundation and Muniya Barua is Deputy Chief Executive at BusinessLDN

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