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Economic Justice

Paying the Living Wage is beneficial to businesses says new research

A new report launched today by  Middlesex University London and University of Liverpool, shows the benefits for SMEs (small to medium enterprises) businesses in the workplace who pay the voluntary Living Wage, are fewer disputes amongst employees, a more productive workforce, an increase in staff motivation and an edge over competitors.

The voluntary Living Wage is currently £9.40 an hour in London and £8.25 an hour across the rest of the UK. This is sometimes confused with the National Living Wage (currently £7.20 an hour), which was introduced by the then Chancellor of the Exchequer, George Osborne.

Putting the Living Wage to Work‘ is the first piece of research to consider the motivation behind small to medium enterprises who pay the  Living Wage. Researchers gathered responses from 60 organisations which responded to a questionnaire, as well as conducting 23 in-depth interviews.

The main findings from the 40-page report are:

  • Almost three quarters of respondents said they had seen a positive effect on their brand reputation by paying the Living Wage
  • 60% reported a positive effect on manager/employee relations in the workplace
  • Over 40% commented that employee morale and productivity had improved
  • Over three quarters of businesses said they paid the Living Wage because it is in line with their company’s values
  • Only 15% said paying the Living Wage had added more than 10% to their wage bill, compared to 40% who said it hadn’t made a difference.

SMEs represent over half of the 2,800 employers who have signed up voluntarily to pay the Living Wage. They make up 99% of all private sector businesses, collectively employing over 15.6 million workers across the UK.

The report also makes a number of recommendations for SMEs who are Living Wage employers:

  • They should develop clear moral and strategic rationales about why they want to be accredited as a voluntary Living Wage employer
  • They need to be clear about which benefits are relevant to their organisation and its success
  • Be prepared to make organisational changes to sustain commitment to voluntary Living Wage accreditation
  • Communicate the changes to employees
  • Publicise their commitment externally to paying the voluntary Living Wage by displaying the logo on company premises, website(s) and social media outlets.

Finally, the report gives guidance on how other organisations, like public sector institutions and members of SMEs can provide support and promote voluntary Living Wage adoption among small and medium-sized businesses.