Government could pay its workers the living wage, says Sentamu
The Living Wage Commission has urged the government to set a target to reduce the number of low paid workers by one million by 2020, in its latest report.
But the commission stopped short of calling on the government to legislate for a compulsory increase in the national minimum wage (NMW) to reflect this higher pay rate.
Instead it urged ministers to adopt the living wage as an “explicit goal” that employers could take up on a voluntary basis.
However, commission chairman Archbishop of York John Sentamu, warned that low paid employees were surviving by relying on food banks and payday loans. "Working and still living in poverty is a national scandal,” he said. “For the first time, the majority of people in poverty in the UK are now in working households.”
Currently the living wage is £7.65 an hour, with the rate for London set higher, at £8.80 per hour, to account for the higher cost of living. In contrast, the NMW is £6.31 an hour, rising to £6.50 in October.
Sentamu said there were employers who could afford to pay the higher rate now. For example, the government could pay its workers a living wage, he said.
In response business secretary Vince Cable said: "The only real way of achieving sustainable increases in living standards is by focusing on economic growth, employment and reducing taxes for the low paid. This is exactly what we are doing."
But research conducted by Censuswide for KPMG revealed that only 8 per cent of people thought that economic recovery was still too fragile to justify wage increases for the lowest paid. Almost three-quarters (70 per cent) agreed that the lowest paid should be the first to benefit when employers revisit their pay structures.
Mike Kelly, director and head of living wage at KPMG, said: “As our own research suggests, the decision to pay a living wage should remain voluntary. However to be truly effective, it won’t be enough for organisations to focus on the pay structures within their own four walls. To really make a difference, employers should work with their contractors and suppliers so that they too are able pay a living wage. After all, only when it becomes a business imperative to pay a fair wage will we be able to help millions out of the poverty trap.”
However, Dr Adam Marshall, director of policy and external affairs at the British Chambers of Commerce, said employers should not face compulsion or regulation to pay the higher rate as it could lead to job losses and difficulties. “Some businesses simply cannot afford to pay a living wage just yet - which is why the commission rejected a compulsory living wage,” he said.