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13 November 2019
This week is Living Wage Week, the annual celebration of the Living Wage movement in the UK. A number of events are being held across the UK by the Living Wage Foundation, the body set up by Citizens UK to campaign for payment of the voluntary Living Wage.
With more than one in five workers across Wales earning less than the Living Wage, this issue has been on the political agenda for a number of years. To coincide with Living Wage Week, Cardiff has been named the first major urban area in the UK to become a Living Wage City by the Living Wage Foundation.
What are the differences between the Living Wage, the National Living Wage and the National Minimum Wage?
These three terms all sound similar, but refer to different rates of hourly pay:
- The Living Wage is the hourly wage needed for an average person to meet average minimum living costs. It is calculated by the Resolution Foundation on behalf of the Living Wage Foundation, and is a voluntary benchmark which employers can choose to adopt. The 2019 living wage rate is £9.30 per hour, with a separate rate for London of £10.75 per hour;
- The National Living Wage is the UK Government’s legal minimum wage for workers aged 25 and above across the UK, set annually following advice from the Low Pay Commission. The 2019-20 National Living Wage is £8.21 per hour; and
- The National Minimum Wageis the legal minimum wage that applies to workers aged 24 and under and apprentices, and is set at varying levels dependent on the worker’s age and whether they are an apprentice.
What does Cardiff becoming a Living Wage City mean for its workers and employers?
To coincide with Living Wage Week, it has been announced that Cardiff will become a Living Wage City. The Living Wage Steering Group chaired by the Leader of Cardiff Council, with senior representatives from civil society and local employers, has set a number of objectives for Cardiff:
- To increase the number of accredited Living Wage Employers from 100 to 150 by 2022;
- To increase the number of job roles that are paid the Living Wage by accredited employers from around 27,250 to 48,000 by 2022; and
- To encourage major employers to become accredited Living Wage Employers
Cardiff Council also operates a Real Living Wage Accreditation Support Scheme that offers SMEs in Cardiff financial support of up to £720 if they become accredited Living Wage employers by 31st March 2020.
What can the data tell us about payment of the Living Wage to employees in Wales?
The Living Wage Foundation highlights that there are over 220 accredited Living Wage Employers based in Wales, as well as a number of other UK-wide employers that operate in Wales. These employers include organisations from the public, private and voluntary sectors.
Many of the media articles on this topic use analysis published by IHS Markit for KPMG based on the Office for National Statistics’ (ONS) Annual Survey of Hourly Earnings, which provides slightly different data to that set out below. IHS Markit’s analysis states that 241,000 jobs in Wales, 21% of all jobs, pay below the Living Wage, and that Wales saw the largest percentage decrease in jobs paid below the Living Wage of all UK nations and English regions except the West Midlands between 2018 and 2019.
The Office for National Statistics (ONS) also publishes data on payment of the living wage on an ad-hoc basis, as shown in the graphics below, with the latest data available for April 2019. This data shows that there were 268,000 jobs in Wales that paid less than the Living Wage in April 2019, equivalent to 22.6% of all jobs in Wales.
Percentage of jobs that paid less than the Living Wage in April 2019, by UK nation and English region
Percentage of jobs in Wales that paid less than the Living Wage in April 2019, by gender
Percentage of jobs in Wales that paid less than the Living Wage in April 2019, by working hours
How is the Welsh Government supporting greater payment of the Living Wage in Wales?
The Welsh Government supports the Living Wage concept and is an accredited Living Wage Employer which pays the Living Wage to its staff. It encourages employers to adopt the Living Wage as one of a range of actions to address the problems caused by poverty and low wages in Wales. All staff directly employed by NHS Wales are paid at least the Living Wage, and the Welsh Government has committed to considering this to ensure fair pay for NHS staff in future years. It has also included in its Code of Practice: Ethical Employment in Supply Chains a commitment that organisations signing up to the code should consider paying all staff at least the Living Wage, and encourage suppliers to do the same. The Welsh Government has published a guide on how to use procurement to achieve this.
In his leadership manifesto, the First Minister Mark Drakeford AM proposed:
- Promoting equality through the fair work agenda of the Living Wage;
- Taking forward the Fair Work Commission and steps to make Wales a fair work nation – with “payment of the real living wage in all companies receiving public funds as a first step”; and
- Developing a Social Partnership Act to put ethical standards of employment and equality “at the core of Welsh Government economic and social policy and public service delivery”. The Welsh Government published a White Paper on Strengthening Social Partnership on 7 November, which is open for consultation until 2 January 2020. Its proposals for Social Partnership legislation include a proposed duty on public bodies to promote fair work, including fair reward.
The independent Fair Work Commission set up by the Welsh Government published its report in May 2019. This made a number of conclusions and recommendations in relation to the Living Wage, including:
- Ensuring that it is a barometer of fair reward when defining fair work, and that employers should either achieve or work towards accreditation as a Living Wage employer;
- Requiring organisations signing up to the Welsh Government’s Code of Practice: Ethical Employment in Supply Chains to demonstrate that consideration has been given to paying the Living Wage;
- Asking the Agricultural Advisory Panel to explore the feasibility of phasing in the Living Wage as a minimum rate of pay in the sector; and
- Including Living Wage indicators as National Indicators in the Welsh Government’s annual Well-being of Wales report.
The Minister for Housing and Local Government, Julie James AM, announced in Plenary on 7 May that the Welsh Government would accept the Commission’s six priority recommendations. In a further written statement on 9 July, she announced that the Welsh Government would accept the remaining 42 recommendations of the Commission ‘in principle’, meaning that it will undertake further work on the detail of the recommendations to assess their impact on policy development and delivery, and their cumulative impact.
On 12 November, the First Minister published a written statement stating that he will write to all public bodies in Wales asking them to achieve Living Wage accreditation.
What are governments in the rest of the UK doing in relation to the Living Wage?
The Scottish Government has undertaken a number of actions to promote the Living Wage in Scotland, including working with the Poverty Alliance to create a Living Wage Nation where 25,000 more people in Scotland receive the Living Wage by 2021; launching a regional accreditation scheme for towns, cities and regions; and working to increase the proportion of workers in low-paid sectors such as hospitality and tourism that are paid the Living Wage. It has also developed a Scottish Business Pledge for employers to show their commitment to fair work through payment of the Living Wage, not using zero-hours contracts and working to reduce the gender pay gap. In February 2019, it published a Fair Work Action Plan, which includes actions on the Living Wage.
The UK Government has concentrated on increasing pay through the National Living Wage, which it proposes will rise to £10.50 per hour by 2024, to around 60% to 66% of UK median earnings. An independent review for the UK Government by Professor Arindrajit Dube was published last week on the feasibility of its proposals.
Article by Gareth Thomas, Senedd Research, National Assembly for Wales
Source for all graphics: Office for National Statistics, Estimates of the number and proportion of employee jobs with hourly pay below the living wage, by work geography, local authority and parliamentary constituency, UK, April 2018 and April 2019