The Living Wage: Clearing up the Confusion
Clearing up any confusion – What’s the difference between the National Living Wage, The Living Wage (as promoted by The Living Wage Foundation) & the minimum wage?
Sorry, you’ll find no punch line here, but had you been looking for one last month, then you might just have found it on Twitter #CallThingsTheLivingWageThatArent
N-Trusted mainly provide cleaning, maintenance & roofing services to businesses & homes in London & the South East of England, but we do offer our more highly specialised services nationwide. We pride ourselves on the quality of our service delivery & the value for money we believe we offer you. Our goal, & that of our employees too, is to be exceptional. We aim to always provide our clients with a level of service that will ensure that N-Trusted is the company who they will retain or use again, & the company they will recommend to their friends & business contacts.
Our staff are the absolute key to how we do things. We make sure they are looked after, treated fairly & with respect. If we look after them, then we feel sure they will look after you. We return our employees’ hard work & loyalty by never paying them anything less than a fair & decent wage as determined by The Living Wage Foundation.
What exactly does this mean though & does this make us different to other cleaning companies?
The National Minimum Wage eventually came into force on the 1st of April 1999, having been introduced as a key policy for the Labour Party in the 1997 election. It was slammed by many UK businesses at the time. Dire warnings were given about job cuts; business closures were prophesied & business leaders generally worried about the possibility that they would not be able to manage the ensuing wage increase that would follow-on as a result of its introduction.
As it usually does however, life (& business) soldiered on & the introduction of the Act, its laudable goal having been to help reduce relative poverty in the UK, remains a fact of life today, & one that most businesses carefully abide by. The Act made it illegal for workers to be paid anything less than the minimum wage. Currently, the minimum wage is £6.50 per hour, although it is set to increase to £6.70 in October 2015.
The contract cleaning industry, much like the leisure & hospitality industry, is unfortunately a notoriously low pay sector, accounting for a large proportion of the UK’s low paid roles. These sectors routinely set their wage rates in line with the minimum wage.
The National Living Wage was announced by the Chancellor of the Exchequer George Osbourne in July of this year. It is calculated on median earnings throughout the UK. It will replace the minimum wage in April 2016 & it too will be legally enforceable. It will start at £7.20 per hour & will have risen to £9.00 per hour by 2020.
Surely, you might say, this is just another increase on the minimum wage & the government has just decided to call it something different this time.
Perhaps, but not quite – this new National Living Wage only applies to workers over 25 years of age. There are also some people who think the Chancellor hijacked the term ‘Living Wage’ & the announcement was subsequently criticised in some quarters &, as is often the case today, met with a certain amount of derision, ridicule & inevitable humour on social media, hence the emergence of #CALLTHINGSTHELIVINGWAGETHATARENT.
So what is it about the term ‘The Living Wage’ – what is the problem?
The Living Wage Foundation was launched by Citizens UK as a national initiative in 2011. Their motto – We believe that work should be the surest way out of poverty. The Foundation, which is independent of the government, promotes a suggested & therefore voluntary pay rate for employers to consider; as such it is not legally enforceable.
According to The Living Wage Foundation, The Living Wage, a term they coined to describe the pay rate they have independently calculated, is what is required to be paid to enable a worker to earn sufficient in order to lead a decent life & cover the basic costs of living. Their ‘Living Wage’ is currently £7.85 per hour, except for those living in London, where it is £9.15 per hour.
Gillian Owen, from The Living Wage Foundation, when asked about the Chancellor’s recent announcement said,
We are delighted that the announcement made in the Budget this lunchtime will see over 2.5 million workers receive a much needed pay rise. This is a massive victory for Citizens UK and those communities, workers and business leaders who have campaigned for a Living Wage since 2001. We agree with the Chancellor that work should be the surest way out of poverty. However, this announcement raises several important questions.
Is this really a Living Wage? The Living Wage is calculated according to the cost of living whereas the Low Pay Commission calculates a rate according to what the market can bear. Without a change of remit for the Low Pay Commission this is effectively a higher National Minimum Wage and not a Living Wage.
Secondly, what about London? We have been working with the Mayor of London for seven years and there’s a London Living Wage rate that recognises the higher costs in the capital, currently £9.15 per hour. These changes will not help the 586,000 people for whom even the 2020 rate announced today would not be enough to live on now.
Thirdly, what about the 2 million under-25s who are not covered by this announcement? To make sure workers in London and those under 25 do not lose out, we call on employers to join the group of 1,600 organisations that have already chosen to become voluntary Living Wage employers.
And, lastly, do the tax credit changes announced today mean that the Living Wage needs to be higher to make sure people have enough?
The Living Wage Foundation says it is now looking forward to a meeting with the Chancellor to address these questions:
What about us?
N-Trusted has, as we have said above, made an emphatic decision to never pay its employees anything less than ‘The Living Wage’, & by that we do mean ‘The Living Wage’ as determined by The Living Wage Foundation, which we are not legally obliged to pay. It is what we feel is the right thing to do – simple.
In being prepared to do this we know we will always attract the best workforce available. In turn, the best workers will give you the best service. Motivated & incentivised staff won’t shuffle around your building going through the motions. They will be brisk & efficient, & are more likely to value their job & better able to provide you with value for money. In this way, & in many other ways, we can demonstrate that N-Trusted’s services won’t cost any more than those of other cleaning companies even though we are bucking the industry trend by making sure our employees are fairly paid.
Find our more on our site or call 01342 822665
For more on the (only right & proper) ‘Living Wage’ go to www.livingwage.org.uk