Living Wages

Seminar on Living Wages

Birkbeck, 27 August 2009

Sue Konzelmann, Director LCCGE, s.konzelmann@bbk.ac.uk

Toby Webb, Ethical Corporation, toby.webb@ethicalcorp.com
Pam Muckosy, Ethical Corporation, pam.muckosy@ethicalcorp.com
 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

London Wage Unit Calculation & Current Figures

Poverty threshold wage: £6.65
Average (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: £7.60
Add 15% to un-rounded poverty threshold wage

Percent of GLA workers earning below

various wage levels
Earnings per hour: 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
 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 Wages
EC 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.
 Living Wages
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
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

You are invited to join our next

debate on 25 September 2009

This debate will be based

on research by Ethical
Corporation.
‘How to embed corporate
responsibility across
different parts of your
company’