LIVING WAGE COUNCILS HAVE POSITIVE RIPPLE EFFECT ON LOCAL BUSINESSES
London businesses are more likely to pay the real Living Wage if their local council is an accredited Living Wage employer, analysis in a new guide from Child Poverty Action Group (CPAG) and the Living Wage Foundation shows. The charities have identified a positive ‘ripple effect’ on local businesses when their council gets Living Wage accreditation.
Accredited councils have significantly more local employers paying the London Living Wage (LLW) than non-accredited councils.1 Among the ten London councils with the highest number of local Living Wage employers, only one borough (Westminster) is not accredited.
Among accredited councils, Islington, Camden, Southwark, Greenwich and the City of London have the highest number of Living Wage employers in the borough. Of non-accredited boroughs, five have three or fewer Living Wage employers.
Number of Living Wage
employers in the community
Accredited Living Wage
|City of London||95||yes|
|Hammersmith & Fulham||19||yes|
|Kensington & Chelsea||15||no|
|Richmond upon Thames||4||no|
|Kingston upon Thames||3||no|
The number of London jobs paid below the LLW ranges from almost a third (30%) in some outer London boroughs to 15% in some inner London boroughs, research from Trust for London and the New Policy Institute shows.2Almost half (16 of 33) of the capital’s councils are now accredited LLW employers.
Overall, one in five jobs (722,000 workers) in the capital are paid below the LLW,3 which is currently £9.75 per hour.
The five local authority areas with the highest proportion of jobs paid below the LLW are all in outer London in Bexley, Harrow, Enfield, Sutton and Waltham Forest. In these areas more than 30% of jobs were paid less than the LLW. Of these local authorities only Waltham Forest is accredited. The five areas with the lowest proportion of jobs paid under the LLW are in inner London, in Tower Hamlets, Islington, Southwark, Camden and Westminster. None of these areas had more than 15% of low paid jobs and all, apart from Westminster, are accredited LLW employers.4
Although child poverty rates in outer London are lower than in inner London, they have remained static over the last decade, standing at 35% in 2003-06, moving to 34% in 2008-11 and remaining at 34% in 2013-16. Child poverty in inner London, on the other hand, has fallen from 51% to 44% to 42% during the same period. There are also more children in poverty (and more children) in outer London (440,000) than in inner London (250,000). A decade ago these figures were 350,000 and 260,000 respectively.5
Child Poverty Action Group and the Living Wage Foundation today publish a guide to help more London councils become accredited LLW employers.6
CPAG Chief Executive Alison Garnham said:
"Workers’ chances of being paid the London Living Wage vary across the capital. But child poverty exists right across the capital – even in the richest boroughs – and spreading the Living Wage has to be part of the solution.
“Our research indicates there may be a ripple effect when local authorities get accredited as Living Wage employers. In areas where councils have signed up, more local employers get accredited than in areas where councils are not signed up. So our message to boroughs who aren’t yet on board is ‘lead by example and get accredited so businesses in your area are encouraged to follow suit’. The child poverty rate remains stubbornly high in outer London and in the capital stands at 37%. And the return of inflation will see London families struggle harder. Councils should be asking whether they can afford not to get accredited.”
Living Wage Foundation Director Katherine Chapman said:
“Being able to earn a wage that meets the cost of living in London is vital protection against the grim reality of in-work poverty. Local authorities should be a beacon of fair play and fair pay and our research suggests that when they set the bar on paying a real Living Wage, local businesses follow suit. The Living Wage improves the quality of life for people who live and work in the area, increases investment in the local economy and builds stronger communities. And the business case is compelling, with better motivated employees, reduced staff turnover and absenteeism and higher quality of service – something our 3,300 accredited Living Wage employers have long recognised.
“Times are tough for local authorities but with inflation rising, the need to protect frontline workers, such as care staff, cleaners and refuse collectors is hard to ignore - and we hope this guide spurs more local authorities to lead the way.”
Forty per cent of 21-24 year olds and 75% of 16-20 year olds in London are on less than the London Living Wage. One third of the UK’s Living Wage payers are in London.7
The CPAG and Living Wage Foundation guide, Moving to The London Living Wage, explains the process and benefits of accreditation for local authorities and includes top tips, local authority case studies and best practice advice for encouraging take-up of the Living Wage among local employers. It includes an introduction by Kevin Hollinrake MP, Chair of the All-Party Parliamentary Group for Poverty.8
Notes to Editors:
The London Living Wage is a voluntary rate of pay independently calculated, based on the cost of living, and set by the Greater London Authority. It is distinct from the statutory higher minimum wage called the National Living Wage, announced by the then Chancellor George Osborne in 2015, which is set by the Low Pay Commission and, with one rate for the whole country, is currently £7.50 per hour.
FURTHER INFORMATION FROM CPAG PRESS CONTACT JANE AHRENDS: 0207 812 5216 07816 909302
- 1. Accredited councils can offer local employers business rate reductions if they become accredited
- 2. www.londonspovertyprofile.org.uk/indicators/topics/low-pay/ produced by Trust for London and New Policy Institute
- 3. Markit, Living Wage Research for KPMG, Structural Analysis of Hourly Wages and Current Trends in Household Finances, 2015, https://home.kpmg.com/uk/en/home/insights/2016/11/kpmg-2016-living-wage-...
- 4. www.londonspovertyprofile.org.uk/indicators/topics/low-pay/
- 5. Households Below Average Income https://www.gov.uk/government/statistics/households-below-average-income...
- 6. Moving to The London Living Wage: A Guide for Local Authorities in London is available from http://www.cpag.org.uk/londonlivingwage
- 7. www.londonspovertyprofile.org.uk/indicators/topics/low-pay/
- 8. Moving to The London Living Wage: A Guide for Local Authorities in London is available from http://www.cpag.org.uk/londonlivingwage