Blog: Paying a living wage is the ethical thing to do
This week marks Living Wage Week, a chance to reflect on what it means to be paid a ‘living’ wage and evaluate how well employers are living up to this promise. Originally set up as an initiative to tackle in-work poverty, the living wage has been defined as the salary an employee requires in order to cover their basic needs, including adequate food, shelter and clothing. 

This Living Wage week also signifies the point at which new living wage rates will be announced.

As stated in the IBE’s briefing on Fairness in the Workplace: pay, the Living Wage initiative embodies the notion of "a fair day’s pay for a fair day’s work”. The Living Wage initiative asks employers to choose to pay the Living Wage on a voluntary basis and so provides an ethical benchmark for responsible pay. As of November 2019, there are 5706 Living Wage accredited employers.

Other than being the ‘right thing to do’, being an accredited Living Wage employer also makes sense from a business point of view. According to the Living Wage Foundation, 86% of accredited organisations report that this has enhanced their general reputation. As many as 80% also say that they have seen an increase in quality of work since promising their employees this higher rate of pay.

The Living Wage Commission also lists several business benefits associated with paying a living wage. These include productivity increases, lower staff turnover, reduced absenteeism, and improved morale. For many employers, these benefits could be achieved in exchange for a relatively small increase in wage budgets.

Such findings correspond with what the IBE considers benefits of adopting an ethical work culture. By treating employees well and looking after their wellbeing, staff turnover will decrease and staff morale will increase. In gaining a reputation for being an ethical employer by treating employees well, this will in turn secure repeat business as staff are able to deliver higher quality work and are supported to maintain an adequate standard of living.

Pay continues to be a contentious topic for the wider public. According to the IBE’s latest Attitudes of the British Public to Business Ethics briefing, executive pay continues to be among the top 3 issues that the British public feels businesses need to address, with 24% of respondents highlighting this as a concern. Not lagging far behind, 21% of respondents emphasise exploitative labour as an issue of concern. These results signify the importance of getting pay right, not just at the top end of the pay spectrum, but more importantly for low-paid, vulnerable workers.

Ethics and values play a large part when younger generations decide where they want to work and which organisations they choose to support. As many as 93% of university graduates say they want to work for a Living Wage employer. This should make organisations want to sign up the initiative to avoid losing out on talented entry-level employees.

But there are also other reasons why an organisation should want to give staff "a fair day’s pay for a fair day’s work”. Research suggests that 24% of women and 15% of men are still paid less than the real living wage, meaning they are unable to afford the basic necessities while being in paid employment. Organisations that care about ethics and the wellbeing of their employees should want to adequately reward staff for their hard work.

Posted: 12/11/2019

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