What does the Living Wage mean for my business?

The Living Wage is back in the headlines, with politicians battling to make it their own.

Last week it was announced that the Living Wage had increased for those in London to £8.55 from £8.30, and outside London to £7.45 from £7.20. Meanwhile Boris Johnson called for all London authorities to abide by the Living Wage, while Ed Miliband called for new powers to name businesses that fail to pay it.

But the Living Wage remains a point of contention. So what does it mean for you and your business?

Is the Living Wage compulsory?

No. As the situation currently stands, employers are not obliged to pay the Living Wage – although they are, of course, legally required to pay at least the National Minimum Wage.

But an increasing number of employers are choosing to pay their staff at or above Living Wage, and many believe that the ‘business case’ has already been made.

Why is the Living Wage a good idea?

Supporters of the Living Wage point to a number of advantages. The first of these is a simple moral imperative: that employers have a fundamental obligation to pay their workers enough to live on. As the cost of living continues to spike, it becomes increasingly difficult to get by on the National Minimum Wage.

But there are also important ‘self-interest’ advantages to the Living Wage. Employers are encouraged to consider the morale-boosting benefits of the scheme. Employees will feel better cared for, and are therefore likely to be more productive, if they are being paid a more reasonable wage. In this way, supporters suggest, the increase pays for itself.

Similarly, as public support for the Living Wage grows, there are significant potential PR gains to be made. Firms that pay the Living Wage accrete valuable consumer goodwill – and again, this can mean that the increased outlay pays for itself.

Finally, the Living Wage is also considered to be a potentially important means by which effective demand can be increased in the British economy. With more money in consumers’ pockets it is hoped that growth can be restarted, meaning that a Living Wage should ultimately be good for everyone.

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