Do you pay your staff a living wage?

On Monday I’ll be representing the Brighton and Hove business community at the inaugural meeting of the Living Wage Commission, organised by the city council, so I want to get your thoughts before I go along.

What’s the living wage?

The idea of the living wage is that everybody in the city should be paid enough to live on.  Nationally, this has been calculated as £7.20 per hour, although bizarrely the figure suggested for Brighton is £7.19 per hour.  This is is more than the national minimum wage of £6.08 per hour. While the minimum wage is a legal requirement – you can’t pay your staff less than this, the living wage can’t be enforced.

Why might we need one for Brighton?

Brighton has some of the lowest wage levels in the South East.  This, together with the high number of students in the city, silly house prices and 3-4% unemployment means that we’re not a rich city compared with our neighbours.  All of this has an effect on the health of local businesses, which is my concern.

Businesses which sell to consumers in Brighton find it difficult because there’s not a lot of money circulating in the economy.  Businesses which sell to other businesses can find it difficult to charge good rates, unless you sell to London or the rest of the UK. There’s an argument that raising wage levels would mean that there’s more money in the local economy, which would then be spent locally, helping us all.

But wouldn’t a living wage be expensive for businesses?

When I’ve been talking to other people about the idea of a living wage, some business people have been horrified by the idea of wage rates as low as £7.19 per hour.  In the knowledge sectors (consultancy, digital, medical technology, education etc) this is a pretty low figure.  Not many web design companies pay their staff on rates this low.

But other sectors such as tourism, entertainment (pubs, clubs, restaurants) and agriculture pay the minimum wage, and find it difficult even to pay this amount, because their margins are very low, and because wage rates are traditionally low in these sectors.  It’s interesting to note that these are the sectors which find it difficult to attract and retain staff and often rely on young people, part timers, and people from overseas.

If you can’t enforce it, what’s the point?

That’s a good point, although you could argue that the national minimum wage isn’t really enforced very well anyway, but most employers accept that you have to pay this.  I think that for a living wage to work, you’d have to make it aspirational, so that businesses want to pay this.  I was talking to one of my lovely clients about whether they should take on an intern, and I commented that most people like to pay their interns at least minimum wage.  Because 30 minutes earlier, we’d been talking about the idea of the living wage, he immediately responded that he’d pay his intern the living wage.  By sowing the seed of the living wage, he’d taken this on board, and wanted to pay it.

Let me know what you think

These are some of my ideas about the living wage – let me know what you think and how it might work in your business so I can point your views forward on Monday.

Update – I ended up chairing the Living Wage Commission, which agreed that there should be a living wage set for Brighton and Hove.  Hundreds of businesses have now signed up, and the campaign is the only one in the world which has been spearheaded by the business community.  A good result.

Brighton supporters of the Living Wage

Brighton supporters of the Living Wage

Photo credit – Thanks to Brighton Chamber and Simon Callaghan for the photos

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