Call for new ways of calculating higher benchmark, following introduction of government-mandated national living wage
The living wage needs to be calculated with a clear and transparent methodology if it is to deliver on its aim of raising living standards and further differentiating itself from the national living wage, according a report from the Resolution Foundation.
Thousands of organisations have signed up to pay the living wage, a voluntary rate set by the Living Wage Foundation’s Living Wage Commission since 2011 and calculated to reflect what its supporters say is the true cost of living.
It currently stands at £9.40 per hour in London and £8.25 outside London; however, the government’s new legal minimum for over-25s, introduced in April 2016 at £7.20 per hour, was named the national living wage, causing some confusion among sections of the public.
The Making the Living Wage: The Resolution Foundation review of the Living Wage report proposes an assessment of the different ways the London and UK living wage rates are calculated, with the aim of aligning the methodologies.
Accepting that the living wage still has room for improvement, and responding directly to changes in living costs in the capital and the wider country, is essential to securing the living wage’s future, said Katherine Chapman, director of the Living Wage Foundation.
“We are in a very different place now than we were five years ago,” she said. “The living wage campaign has grown exponentially since 2011 and there have been some major breakthroughs with organisations across broad sectors becoming living wage-accredited. After the introduction of the national living wage in July 2015, our member sign-ups have continued to spike – our concern now is to make sure our campaign is grounded and its methodologies aligned.”
During a panel discussion to launch of the report, co-author Conor D’arcy of the Resolution Foundation said the living wage campaign should not be overshadowed by the national living wage. The campaign must focus on moving forward and tackling fresh implementation challenges, he said.
Insurance giant Aviva has been accredited since April 2014, and said it had seen improved employee wellbeing, greater organisational output and an increased sense of trust in the company as a result of adopting the higher minimum.
Stuart Wright, property and facilities director, said: “A strong desire to introduce the living wage is fundamental to its success. The biggest challenge for Aviva was the impact it would have on our organisation in the long term, and uncertainty about whether we would face a vast cost hike. Having a strong methodology will not only help businesses that are questioning their long-term plan, but will support them in implementing it. ”
Greater transparency, and regular feedback from members of the public about how their standard of life is being affected, will be central to the development of the campaign in future, according to the report: “With a strong, aligned methodology and an enhanced governance structure, we see no reason why the living wage cannot continue to raise the wages of workers across the UK, delivering more families an acceptable standard of living.”
The report will be submitted to the Living Wage Commission, which is expected to respond to its proposals in September.