Living Wages

Sue Konzelmann, Director LCCGE, s.konzelmann@bbk.ac.ukToby Webb, Ethical Corporation, toby.webb@ethicalcorp.comPam Muckosy, Ethical Corporation, pam.muckosy@ethicalcorp.com

Roundtable Debate on Living Wages

Birkbeck, 27 August 2009

Living Wages

A living wage is ‘a wage that achieves an adequate level of warmth and shelter, a healthy palatable diet, social integration and avoidance of chronic stress for earners and their dependents.’

(Family Budget Unit 2009)

Living Wages

Historical Roots

Early history•Rerum Novarum (1891)•Turn of century legislative reform movement•Quadragesimo Anno (1931)

Modern living wage movement•Baltimore Living Wage Act (1994)•London Living Wage Campaign (2001)•London Living Wage Unit (2004)

Living Wages

Poverty threshold wage: £6.65Average (rounded to nearest 5 pence) of•Basic Living Cost Approach: the wage required to meet a ‘low cost but acceptable’ budget for a typical family (£6.45)•Distribution of Income Approach: 60% of median hourly wage (£6.80)

London Living Wage: £7.60Add 15% to un-rounded poverty threshold wage

Earnings per hour:

Percent of GLA workers earning below various wage levels

Full-time

Part-time

Full & P-time

National Minimum wage

£5.73 10 %

Poverty Threshold wage

£6.65 10 % 37 % 15 %

London Living Wage £7.60 15 % 47 % 20 %

Source: Guardian.co.uk 22 May 2009

London Wage Unit Calculation & Current Figures

Living Wages

Living Wage Employer Award

• The Living Wage Employer Award recognizes ethical employment and ethical procurement practice

• All staff must be:– paid at least the Living Wage– Eligible for at least 20 days paid holiday a

year plus bank holidays– Eligible for at least 10 days sick leave a year– Allowed free access to a trade union

Living Wages

The Critics

• A wage floor is harmful to low wage workers, employers and society as a whole– Low wage workers become unattractive to

potential employers– Increased cost of living reduces buying power of

low wage earners, leaving them no better off– Costs of production, inefficiency and inflation are

also increased

• There are less disruptive ways of delivering income to the poor

Living Wages

The Proponents

• The academic literature:– Living wage provisions are not found to be associated with

job losses or worker displacement– There is evidence of productivity increases – Increased cost pressure provides incentives for firms to

seek efficiency and cost savings elsewhere

• London Economics Study (2009)– Benefits: recruitment & retention, absenteeism & sick

leave, productivity, morale & motivation, reputation, employee financial & welfare benefits, workplace change

– ‘There is a real business case for organizations to implement the London Living Wage.’ (p. 4)

Living Wages

For the Debate

•Whose responsibility is it to make sure that working people make a decent living?

•How much is enough?

Living WagesEC Findings – the Issues•Tangible action

•Supply chains or living wages?

•Blame governments or employers?

•Wage levels are always on the campaigner/trade union agenda

•No consistent definition

•Inconsistent application

•Labour union-NGO tension

•Who should bear the added cost?

•Ignores agricultural and informal sectors

•Wages set by global (not national) D & S of labour

Living Wages

EC Findings – the Players

Employers: supplier codes of conduct, job security, decent hours, safe working conditions, training & development, & contribution to the local economy.

Government: social security, minimum wage, supporting select industries, defining and mandating a living wage.

NGOs: research, campaigns, translate the local context & define living wages, & provide a platform for discussion.

Unions: collective power, negotiations, & keep the debate going.

Dozens of definitions & methods for measuring & transferring income. Just a few…

Decent work

Forms of capital

Livelihoods

LED & VCA & Inclusive growth

Direct transfers

Access

Basic needs

Vulnerability

Living Wages

Living Wages

EC Findings - What’s ahead?

-Adjusted cost of living used for relocated managers

-Research and plan for smaller margins

-Campaign or legislate retailers

-Government use of an inclusive tri-partite process

-Campaign & work with employers to implement living wage

-FLA wage ladder

-Integrate living wage into a social audit

Living Wages

Your views…

•Whose responsibility is it to make sure that working people make a decent living?

•How much is enough?

Living Wages

‘How to embed corporate responsibility across different parts of your company’

WWW.ETHICALCORP.COM/CSR

If you would like internal training, or to be added to our mailing list, please email me at Pam.Muckosy@ethicalcorp.com or visit www.ethicalcorp.com/training