The second well-known corporation to notify workers that it would no longer be adhering to the true living wage is the United Kingdom-based business service provider Capita.
The objective of the independently determined rate is to guarantee that those with the lowest incomes can afford the essentials of a respectable living. It was developed as a result of a grassroots initiative to better the lives of the UK’s poorest inhabitants.
However, Capita has joined the brewer and bar operator BrewDog in informing employees that it could no longer afford to pay the actual living wage, which soared to £12 an hour, following two years of 10% hikes as inflation tore through the economy. Unions worry that more businesses might be gearing up to follow.
The Communications Workers Union (CWU), which represents a large number of employees at Capita and who are under contract to work for a variety of clients like ‘Virgin Media’ and ‘Tesco Mobile’, is in consultation with its members over the next course of action.
“It’s sad: these are the lowest earners and it makes a big difference to them,” remarked CWU’s Tracey Fossey, as she stated further, “We disagree with Capita’s assertion that they cannot sustain it, given that the CEO will receive almost £1.7 million in compensation in 2022.”
“All of our lowest-paid employees will receive a pay rise that is above inflation. We are still dedicated to our employees, and as part of our ongoing cost-based assessment, we will consider this decision again when it makes sense,” a Capita representative stated.
Knowing things better
The statutory minimum wage, which all businesses are required to pay, was renamed as a “national living wage” in 2015 by the then-chancellor, George Osborne, as a backhanded homage to the living wage movement, which had pushed for higher wages along with other demands like regular hours and fewer antisocial shifts.
However, the movement that called itself the “real living wage” campaign is still commissioning studies, establishing a higher salary floor based on the cost of living for low-paid workers, and pressuring employers to commit to paying it.
The Living Wage Foundation’s director, Katherine Chapman, expressed her disappointment with Capita and BrewDog’s choice to abandon the norm, but she also stated that the cause is still going strong.
“Due to changes in the cost of living, rates have increased significantly during the past two years. However, in just the past year, 3,000 employers have signed up with us,” she stated.
According to Chapman, companies may set themselves apart from the competition by committing to pay a real living wage, as investors and customers are becoming more aware of how these companies treat their workers.
“There is a strong case for the network’s continued growth based on our observations and conversations with businesses,” she states.
Not only has the real living wage increased significantly to keep up with the skyrocketing cost of living, but the government’s mandated “national living wage” is also set to rise by 10% in April 2024 to £11.44 an hour as it moves closer to two-thirds of the median rate across the economy.
Unease prevails
According to Neil Carberry, CEO of the ‘Recruitment and Employment Confederation’, some employers are uneasy about the second substantial rise in a row.
In 2024, more members are sending him emails about it than ever before, he claimed, while explaining, “They care deeply about equity in the workforce as well as affordability for themselves.”
“If last year’s private sector settlements were between 5% and 8%, a 10% increase in the minimum wage and living wage didn’t feel like a huge blow to the tent,” he continued.
“If you get a second one this year, your entry-level pay has increased by roughly 20% in just two years. There seems to be a lot of worry about worker equity from what I hear,” Carberry remarked further.
However, TUC head of economics Nicola Smith categorically denied the notion that the national living wage is growing too expensive. She said, “The TUC still demands a minimum wage of at least £15 per hour.”
“Over the past ten years, there has been a substantial body of evidence demonstrating that raising the minimum wage for the lowest paid workers in our labour market has been feasible during some extremely difficult economic times with no adverse effects on the labour market at all,” Smith commented.
A total of 14,000 firms have agreed to pay a real living wage of £12 per hour (£13.15 in London). Among them is Eland Cables’ executive director, Jean-Sébastien Pelland. As an owner-manager who collaborates with his employees, he asserted that it was “absolutely the right thing to do, both morally and economically.”
From an economic perspective, Pelland believed that providing for and treating people properly makes sense.
“It necessitates that we spend less money and effort on hiring. As an alternative to repeatedly learning the fundamentals, we might focus on expanding our skill set. Additionally, it improves Eland Cables as a location to be,” he remarked further.
Co-founder of Bird & Blend Tea Co., a business dedicated to the real living wage that is located close to Brighton, Mike Turner acknowledged that this year’s 10% increase was expensive, especially when considering the ripple effect higher up the income range.
He calculated that roughly 100 employees, spread among the company’s 17 stores and warehouse, make the actual livable wage.
“It wouldn’t be serving its purpose if it was lower, but part of me thinks it would have been nice if it was. There is no purpose in joining such a scheme if you leave it before it has a chance to bite and hurt you,” Turner observed.
The issue of the true living wage continues to be a contentious topic in the United Kingdom. While some companies like Capita and BrewDog have chosen to abandon the practice, others such as Eland Cables and Bird & Blend Tea Co. have committed to paying their employees a real living wage.
The Living Wage Foundation and its supporters continue to push for higher wages and better working conditions for low-paid workers, while the government’s mandated national living wage is set to rise again in April 2024.
The dedication of companies like Eland Cables and Bird & Blend Tea Co. to prioritise their employees’ well-being exemplifies a moral and economic imperative. The Living Wage Foundation’s unwavering pursuit of higher wages underscores a broader movement for social equity. As the government’s mandated national living wage climbs, the conversation on equitable compensation intensifies. In the United Kingdom’s dynamic work environment, there is a strong collective commitment to fair wages and dignified labour, which is shaping the future of work.