THE BLOG
03/09/2018 08:13 BST | Updated 03/09/2018 08:13 BST

A Real Living Wage Would Boost Local Economies While Reducing The Scourge Of Low Pay

A rise for even a quarter of those paid below the real Living Wage would mean an annual bump of over £1,700 for half a million people

Mike Kemp via Getty Images

New research shows that a pay rise to the real Living Wage for just a quarter of those paid below it, and living within the UK’s ten major city regions, would mean an average annual pay rise of over £1,700 for half a million people. The report also finds that through an increase in worker productivity and consumer spending, an increase in Living Wage jobs could boost local economies by millions.

The UK’s biggest city regions - West Midlands, Greater Manchester and London, home to 1.4million low paid workers – would make the highest gains from a ‘Local Living Wage Dividend’, with the West Midlands getting a £51million economic boost, Greater Manchester growing by £53million, and London by £294million.

Low pay is the scourge of the UK’s city regions, exacerbating poverty, impacting on wellbeing, productivity and economic growth.  Many mayors and local authorities are considering how to build inclusive and successful local economies that reduce low pay – this report shows them how.

The report calls on local and combined authorities to not only join the movement of Living Wage accredited employers, but to also embed the Living Wage within local economic growth strategies. It suggests working with so called “anchor institutions” – major local employers such as football clubs, hospitals transport hubs and universities to encourage Living Wage take-up that can have a significant impact on local workers, and a positive ripple effect on the local economy.

It also recommends using the substantial budgets of mayors and local authorities to encourage more employers to go beyond the government minimum to ensure their staff earn a real Living Wage.

In some places, such actions are already being taken, with a range of major employers and local authority leaders coming together to build collective plans to drive higher wage, higher skill economies. In many cases this includes focusing on an increase in Living Wage jobs.

In Oxford, for example, becoming a Living Wage City is a key strand of the city council’s Inclusive Growth Task and Finish Group, and has the backing of major employers and anchor institutions. In Salford, the commitment of the local council alone led to 1,000 people receiving a pay rise, and a group of local councils are exploring how to embed the Living Wage within new development zones. 

The campaign for a real Living Wage has its roots in place, beginning life in East London in 2001, in an area with one of the highest wealth disparities in the country. Families living in the shadow of Canary Wharf felt disconnected from the benefits of growth, and some of the first Living Wage campaigns successfully targeted large financial firms to ensure their caterers, cleaners and security guards earned a wage they could live on, not just the government minimum.

Today there are nearly 4,500 Living Wage employers and the campaign has raised wages for over 150,000 workers and their families. The difference between the real Living Wage and the government minimum for a full time worker is over £1,800, and £4,500 in London.

But as the report makes clear, more can be done. There are still many places where people do not feel that they have benefitted from growth in recent years. Over the last decade, living standards have stagnated and there has been a rise in the use of precarious working arrangements such as zero- and short-hours contracts in the economy. Today’s research shows how we can harness the energy of local places to tackle these problems.

Clare Goff is a Project Manager and oversees a new pilot on Living Wage Places at the Living Wage Foundation

The Local Living Wage Dividend was developed by the Smith Institute, and funded by the People’s Health Trust, the Barrow Cadbury Trust, and Aviva.