The Living Wage

An interesting article appeared in today’s Independent about a campaign to encourage Waterstone’s, the well known high street book retailer, to pay staff the Living Wage.

As I often say to my students, when discussing the issue of pay, it is a hugely emotive issue – especially if you happen to be at the lower end of the wage scale and have difficulty getting your proper entitlement.

The idea of the employee or labourer being worthy of his or her hire is a deeply ingrained cultural norm in European and North American societies (largely underpinned by many scriptural references in both the Old and New Testaments of the Christian Bible e.g. Deuteronomy 24: 15 and Matthew 20: 8).

The employer, of course, has a contractual duty to pay her employees in return for them providing services.

A link to the article can be found below:

‘We should insist that staff in bookshops are fairly paid’
https://edition.independent.co.uk/editions/uk.co.independent.issue.290319/data/8843991/index.html

As the article notes:

“Paying the living wage also makes sense from a business perspective. The Living Wage Foundation said that 93 per cent who paid the wages had seen benefits in retention and motivation of staff, and company reputation.”

As the Living Wage Foundation emphasises the real Living Wage is £10.55 for those working in London and £9 for those working across the rest of the UK. As we shall see, the UK Government introduced its own version of the Living Wage in 2016, but this is less generous. This was effectively a higher National Minimum Wage rate for people aged over 25.

As the Foundation states:

“The real Living Wage rates are higher because they are independently-calculated based on what people need to get by. That’s why we encourage all employers that can afford to do so to ensure their employees earn a wage that meets the costs of living, not just the government minimum.”

A link to the website of the Living Wage Foundation can be found below:

https://www.livingwage.org.uk/

The National Minimum Wage

The introduction of the National Minimum Wage Act 1998 ensured that workers must receive a basic hourly wage depending on their age.

One of the most important changes to the National Minimum Wage Scheme since February 2005 is the inclusion of young workers i.e. young persons aged 16 and 17 years old. Previously, these individuals were not covered by the National Minimum Wage Act 1998. The British Government, however, finally accepted the recommendation of the Low Pay Commission that the Scheme should be extended to young workers.

The Living Wage

In many respects, the debate about the National Minimum Wage has moved on from the late 1990s when organizations such as the Conservative Party, the Confederation of British Industry and the Institute of Directors were uniformly hostile to its introduction by the first Labour Government of Tony Blair (1997-2001) on the grounds that immense damage would be done to the British economy. These fears were not realized and the minimum wage has become an accepted feature of British employment rights. The debate concerns the introduction of the Living Wage.

The Living Wage Foundation actively calls on employers to pay an enhanced income ensuring a basic standard of living. The Labour Party had promised to introduce a Living Wage if elected to form the next UK Government in 2015 and it was thought that, with the Party’s defeat at the last General Election, the idea would be placed on ice during the next Parliamentary term. It was therefore somewhat surprising when George Osborne, the former Conservative Chancellor of Exchequer announced, during his 2015 Autumn Statement, that the Coalition Government intended to introduce a National Living Wage in April 2016.

From 1 April 2016, under the National Living Wage, employers had to pay workers over the age of 25 (and who are not in the first year of an apprenticeship), a minimum hourly rate of £7.20. These individuals must work 2 or more hours a day for 8 or more consecutive weeks of the year. There was no requirement to pay the National Living Wage to volunteers, interns and apprentices – as well as contractors on the supply side. Critics of the Coalition Government were quick to point out that the statutory rate was less than what was understood by the real Living Wage recommended by the Living Wage Foundation (i.e. £7.85 per hour or £9.15 inside London). The Coalition Government had stated that it was committed to raising the National Living Wage by 2020.

From 6 April 2019, the National Minimum Wage will rise from £7.83 per hour to £8.21. The real Living Wage for 2019-20, however, has been set at an hourly rate of £9 outside London and £10.55 inside London.

Employers who refuse to pay the National Living Wage will face enforcement action similar to that already carried out in relation to the National Minimum Wage.

There is no doubt that the Living Wage is an idea whose time has come. It is worth noting that many employers already pay their workers the real Living Wage on a voluntary basis and proudly publicise this fact.

The concept is not without its critics and the BBC reported on 1 April 2016 that the independent Office of Budget Responsibility had calculated that as many as 60,000 jobs could be lost as a result of its introduction. As we have discussed, similar claims in the late 1990s were made about the introduction of the national minimum wage and these proved to be largely groundless.

The positive impact of the National Living Wage seems to be supported by research carried out by the Ulster University Economic Policy Centre. In Northern Ireland alone from 2020 onwards, 128,000 people will benefit from a pay increase due to the National Living Wage being increased.

National Living Wage to drive pay bump for thousands

More than 128,000 in NI will get a pay rise by 2020 due to the National Living Wage, study suggests.

Postscript

The Low Wage Commission published research at the end of April 2019 showing that the number of workers who do not receive the national minimum wage increased in 2018. A link to the Commission’s report can be found below:

https://www.gov.uk/government/news/minimum-wage-underpayment-on-the-rise-low-pay-commission-finds

Copyright Seán J Crossan, 29 March & 26 April 2019

Published by

sjcrossan1

A legal blog by the author of Introductory Scots Law: Theory & Practice (3rd Edition: 2017; Hodder Gibson) Sean J. Crossan BA (Hons), LLB (Hons), MSc, TQFE I have been teaching law in Higher and Further Education for nearly 25 years. I also worked as an employment law consultant in a Glasgow law firm for over a decade. I am also a trade union representative and continue to make full use of my legal background. Please note that this Blog provides a general commentary about issues in Scots Law. It is not intended as a substitute for in-depth legal advice. If you have a specific legal problem, you should always consult with a qualified Scottish solicitor who will be able to provide you with the support that you require.

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