Has paying more paid off?
 CeBR forecasts based on ONS statistics of the average spend of those in retirement.
Has paying more paid off?
Perhaps the government’s surprise announcement that it will implement a National Living Wage rising to £9 by 2020 for over 25s shouldn’t have been a shock. The idea is nothing new and some companies have already have chosen to adopt wage rates at the recognised Living Wage level.
The claim that a happy worker is a productive worker just happens to be true. As I’m sure we’d all agree; a better paid worker is normally a much happier one. But what is more surprising are the benefits for the companies who have made this decision. These companies reported that providing a living wage can help to retain staff, improve employee engagement and reduce absenteeism. For many companies paying more than the minimum makes good business sense.
A good example of this was National Express, the first private transport group to commit to adopt a higher Living Wage, which they pitched 20% higher than the national minimum wage at that time. After considering wider social trends, they saw need to take action. They faced stiff competition for qualified staff both in the US and UK, as well as high staff turnover and labour unrest. For National Express and for many other companies adopting the Living Wage has been first and foremost a business decision.
There can be drawbacks to this approach. Companies that rely on a high percentage of low paid staff, including the retail and service sectors will be more deeply affected by this change. Yet, many companies were privately considering this issue long before the announcement in the Summer Budget and it’s not just the big brands. Some cleaning and catering companies have been offering their clients the option of including a Living Wage clause in their contracts for many years.
An increase to a company’s wage bill can ring financial alarm bells, but industries have previously and successfully tackled new standards on wages. For some firms, it’s an investment in the brand; a clear demonstration of their duty to their staff. For others, it has boosted a number of creative discussions around the relationship between pay, remuneration and staff productivity. The Living Wage should not be a standalone issue, but instead help to answer a fundamental question for any company: How to manage their staff?
Successful companies read the public mood and anticipate change. While pay is obviously not everything, a job is meant to afford you the dignity of covering the bare essentials. My bet is that the companies that had the foresight to consider the long term effect of persistently low wages will come out of this policy change just fine.
Ashley Hamilton Claxton
Corporate Governance Manager