= LIVING WAGES CAMPAIGN

Frequently Asked Questions

1. What is the Living Wage?
2. What is the nature and size of the low pay problem?
3. What is the aim of the campaign?
4. Why is this campaign relevant to ShareAction?
5. Why the focus on UK FTSE 100 companies?
6. What benefits will flow to individuals, families and communities if the campaign is a success?
7. What is the ‘activate your money' action all about?
8. What is the business case and why should investors take a particular interest?
9. What does it cost employers?
10. Will it create unemployment?
11. Who already applies Living Wage standards?
12. Is this a party political issue?
13. How does Living Wage Accreditation work and what does it cost?
14. How can I get in touch ShareAction for more information?

The Issue

What is the Living Wage?
A Living Wage is the minimum hourly wage necessary for housing, food and other basic needs for an individual and their family. Living Wage rates are based on Minimum Income Standards methodology and take account of real living costs for essential goods and services. Within London, the Mayor's Office announces the Living Wage figure each year - currently £8.55 per hour. Outside London, the Centre for Research in Social Policy at Loughborough University has calculated a single rate for the regions which is £7.45 per hour. Accredited Living Wage employers ensure all their own staff and those of their on-site contractors are paid at least the Living Wage across all UK operations.

What is the nature and size of the low pay problem?
Low pay is a growing problem in the UK. Excluding young workers, amongst whom low pay is even more prevalent, 3.5 million working adults aged over 22 were earning less than £7 in 2010. Two thirds of these were women. Low pay has a particularly significant impact on children. In 2008/9, 2.2 million children growing up in households below the poverty line had at least one parent in work, accounting for 53% of all poor children in the UK. Between 2003/4 and 2008/9, the number of poor children in households with a worker grew by 25% (450,000 children). Low pay is closely associated with others social disadvantages including poor health, substandard housing and personal debt.

JustPay! Campaign

What is the aim of the campaign?
ShareAction's campaign aims to permanently embed Living Wage standards in the UK's private sector, beginning with the biggest companies on the London Stock Exchange, namely the FTSE 100. The campaign aims to secure the support of major investors including pension funds and City fund managers as lead activist investors, as well as to mobilise the public. ShareAction's campaign builds on ten years of work by Citizens UK, with whom we are working closely along with other partners, but brings to bear the leverage of investors.

Why is this campaign relevant to ShareAction?
Pension funds and their asset managers are major holders of equity in FTSE listed companies. The investment industry, including pension providers, has significant influence on corporate behaviour and is well positioned to encourage commitment to Living Wage standards. Pension providers take care of the savings of millions of working people who are uneasy about the rapid growth in wage inequality in many listed companies. The campaign gives expression to that concern and provides one practical remedy to resolve it.

Why the focus on UK FTSE 100 companies?
Although FTSE 100 companies are a highly diverse range of companies, all enjoy the benefits of being in Britain's business premier league. In every sector of the economy these companies help to set standards. Adoption of Living Wage standards by FTSE 100s is critical to embedding Living Wages in the lexicon of corporate social responsibility in the UK. Almost anyone with a private or occupational pension has investment exposure to the FTSE 100, giving millions of UK workers a stake in this campaign and a legitimate reason to voice their support.

What benefits will flow to individuals, families and communities if the campaign is a success?
Living Wages give workers the dignity of achieving a ‘low cost but acceptable' living standard through their own labours. These rates of pay allow working people to make time for family and community in a way that is not guaranteed on the National Minimum Wage. The nutritional analysis which goes into costing the level of the Living Wage shows that workers' health is at risk below this rate of pay. Low pay and the poverty which results from it is costly to the wider community. Joseph Rowntree Foundation's research shows that child poverty alone costs £25 billion each year to the Exchequer and in reduced GDP.

What is the ‘activate your money' action all about?
Together we hold billions of pounds through our bank accounts, ISAs, pensions, and even insurance policies. This gives us the power to positively influence some of the biggest companies in the world. We believe that activating the power of our organised money can literally change lives, helping to lift families out of working poverty.

We asked people to take action by emailing any finance company that they are a customer of (whether it's your bank account or pension provider or mortgage broker, etc) to ask them to become a Living Wage employer. At a later date, we will be turning our attention to other sectors within the FTSE 100, so keep an eye out for more updates. The overwhelming response we have received has helped us make the case for a Living Wage.

The Business Case

What is the business case and why should investors take a particular interest?
Companies who have adopted Living Wage standards report a range of business benefits including significantly improved staff retention, workforce productivity, staff morale and enhanced corporate reputation. KPMG is a leader on this issue, having written Living Wage standards into all UK contracts. Guy Stallard, Director of Facilities at KPMG, has said, "We've found that paying the Living Wage is a smart business move as increasing wages has reduced staff turnover and absenteeism, whilst productivity and professionalism have subsequently increased."

Labour practices, particularly remuneration strategies, of individual employers impact the business environment for companies in the wider economy. Investors with a well diversified portfolio of UK stocks have an incentive to be enlightened in their approach to this issue because the payment of Living Wages adds materially to consumer spending power and confidence at a time when this is a vital determinant of business success and profitability.

What does it cost employers?
Moving a full time worker from National Minimum Wage (NMW) to the Living Wage costs £2,500 a year. Where workers earning less than the Living Wage already get more than the NMW, the cost is obviously less. Companies which outsource cleaning, catering and other facilities services must require their contractors to pay at least the Living Wage to qualify for accreditation. Where low paying services are outsourced, the cost of introducing Living Wages is often shared between contractor and client. It is important to note that there are also cost benefits of Living Wage standards - see the business case above.

Will it create unemployment?
No. The Living Wage is a voluntary commitment made by employers who choose to make it a priority and can afford it. This militates against the risk of unemployment. As stated above, the payment of Living Wages is an efficient way to increase spending power in the economy. Indeed the anticipated macro-economic effect of this campaign is to increase the overall supply of jobs and to boost economic growth.

Other Questions

Who already applies Living Wage standards?
The Living Wage campaign started in London ten years ago. Over 100 significant employers in the public, private and voluntary sectors are London Living Wage employers. Financial services providers have been at the forefront of private sector adoption of Living Wage standards in the capital. Meanwhile, the Living Wage movement has been taking off in many other parts of the country. For example, in Scotland, the NHS recently moved 4500 staff onto Living Wages. In Wales, the North West and the South East, Living Wage work is on-going and scoring successes in all sectors of the economy.

Is this a party political issue?
No. Senior figures in all major parties have endorsed Living Wages. Prime Minister David Cameron has stated that the Living Wage is "an idea whose time has come". Boris Johnson, Conservative Mayor of London, is a particularly outspoken supporter, having adopted the standards through out the Greater London Authority and promoted them to major employers in the capital. On the Labour side, party leader Ed Miliband has long been a strong and vocal supporter of Living Wages.

How does Living Wage Accreditation work and what does it cost?
The Living Wage Foundation launched in May 2011, modelled on the highly successful Fairtrade Foundation. The LWF will provide technical support and advice on implementation of Living Wage standards and will administer the accreditation scheme for compliant employers. Accreditation fees are charged on a sliding scale. The highest fee is £1000 pa.

Further Information

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