The Blog

Moving Beyond Pay

With the Chancellor introducing a new National Living Wage from April 2016 and the revised voluntary Living Wage rates published this week, low pay is firmly placed on the boardroom and political agenda.

With the Chancellor introducing a new National Living Wage from April 2016 and the revised voluntary Living Wage rates published this week, low pay is firmly placed on the boardroom and political agenda.

Yet while increasing pay is one sure-fire route to improve low-income employment, the on-going debates about tax credit changes reminds us of the precarious nature of workers' incomes.

Increasing numbers of working families are living in poverty and only 1 in 4 low-paid workers is likely to escape low pay over a 10 year period. Clearly pay is just one part of the picture and while the National Living Wage is an important step to increase income, it just won't be enough on its own.

It is against this backdrop that Business in the Community and the Social Mobility and Child Poverty Commission, have been working with 11 companies from low-paying sectors to investigate how employers can improve low-income employment in the UK.

Our report Beyond Pay: An Inquiry into improving low-income employment, published today identifies a need for a more strategic approach from employers to improve the prospects of those in low income employment with six key areas for business action: pay & security; line management; communication; job design; skills & progression; and cost of living support.

The research argues that employers can enable their employees to increase their productivity and develop beyond their current low-paid role through considering job design, skills development and progression opportunities. This can be supplemented by benefits packages and additional support with managing living costs and life's challenges. It's important to note that these actions can only be targeted at, and accessed by, those in the lowest-paid roles through effective line management and communication.

It also found that employers are not only recognising their social imperative to better support their employees, and ensure they are doing much more than 'just coping' - they also recognise the business benefits from doing so, from more engaged employees and lower turnover to greater internal progression. These are powerful findings, particularly coming from employers in traditionally low pay sectors like care, retail and hospitality.

I'm not suggesting this is simple. Commercial constraints exist and the structural challenges within our labour market won't be solved overnight. But with focus and some senior leadership to drive forward the wide range of actions needed, the benefits could be felt by many thousands of employees.

There are some powerful examples of businesses already taking action to support those on low pay:

• The Joseph Rowntree Housing Trust tailors healthcare benefits to support the needs of their carers and give them greater access to osteopathy and chiropody appointments.

• Hospitality group Whitbread incentivises line managers to provide greater support and progression opportunities to their teams and assesses them on how well they do this;

• Sodexo has produced a website tailored to front-line workers, giving them better access to the information they need to take up new opportunities, training and find out about benefits;

Introducing the National Living Wage is part of the government's objective to transition to a higher wage, lower tax, lower welfare economy whilst promoting job creation and higher employment rates. But when productivity is low and turnover is high, businesses can't afford to only think about numbers of jobs - quality of jobs is crucial too.

At a time when the UK is grappling with the lowest levels of productivity across the G7 and a growing skills gap that could pose a threat to future growth, a broad approach to improving low-income employment that encourages and supports the UK's existing employees towards the higher quality and higher skilled jobs that lift them out of poverty has to be part of the solution.

Beyond Pay: An Inquiry into improving low-income employment was created with the support of the Social Mobility and Child Poverty Commission and published on 2 November 2015.

The complete report is available on the Business in the Community website