Douglas White 17 May 2019

Harnessing the power of place can lead to better pay

Growing the local economy and boosting the amount of money that people have in their pocket are high priority issues for many local authorities across the UK.

Councils have different levers to pull to try and achieve these goals, which offer varying degrees of effectiveness, speed and visibility. Now a new initiative, led by the Living Wage Foundation and the Poverty Alliance, backed by the Carnegie UK Trust, is gathering momentum.

Last month a building owned by Lambeth Council, International House in Brixton, was named as the UK’s first Living Wage Building.

Achieving this award means that the council has made a commitment to require all the businesses, social enterprises and charities who are their tenants at International House to pay their employees at least the London Living Wage. This is a significant and important commitment to an ever-growing national agenda, which will guarantee a decent level of pay for the 850 people who will eventually work in the space.

The Living Wage Places movement is gaining traction in other parts of the country too. Dundee in Scotland was named the UK’s first Living Wage City earlier this year, with an ambitious target to double the number of workers in the city employed by an accredited real Living Wage employer within three years. It’s expected that more cities and towns will soon start to accredit themselves as Living Wage places while the Living Wage Foundation is expected to announce the UK’s first ‘Living Wage zone’ soon.

This is all to be commended as despite the ONS reporting in April that the number of people in work is currently at a record high of 32.7m, around six million workers are paid less than the real Living Wage and are struggling to keep their heads above the poverty line. Indeed, the Joseph Rowntree Foundation has calculated that more than four million workers in the UK are living in poverty and that the number continues to rise.

In this context, improving pay really does matter. Workers need a decent income to be able to buy the things they need, take control of their lives and participate fully and actively in society. Low pay contributes to social isolation and to physical and mental health problems. It is an issue that all those engaged in public policy should be concerned with.

There is also plenty of evidence of how decent pay can contribute to improved economic performance for businesses, with positive impacts on key issues such as motivation, productivity and retention.

Many of the drivers, incentives and challenges to improving pay sit at a national level. But there is also a vital, local dimension. Our individual and collective wellbeing is hugely shaped by the places where we live and work. Place affects our education, our employment opportunities, our relationships and our environment.

Meanwhile, the characteristics of local labour markets and economies impact significantly on the wages that workers receive. The Living Wage Places initiative provide a new opportunity to harness the power of place, involving local employers, communities and consumers to help extend the Living Wage to more workers and lift more people out of low pay.

Early adopters, such as Lambeth Council, have the power to encourage more employers to transform the way they tackle issues around low pay and ultimately improve the quality of work for people across the country. This approach aligns with international evidence that shows the ways in which local, placed-based transformation can come about – local leaders driving change, tackling economic challenges, supporting cross-sector collaboration and making a long-term commitment.

Local towns and communities can also benefit from the increased productivity and extra spending power of local citizens. The Smith Institute calculated the ‘Local Living Wage Dividend’ which calculates the boost that city regions would get if a quarter of low-paid citizens within a region were given a pay rise and found that Greater Manchester, for example, would get a £53m economic boost and West Midlands would grow by £51m.

So, now is the time for local areas across the country to get on-board and explore the benefits that becoming a Living Wage Place could make for local workers and the local economy. Visit www.livingwage.org.uk/what-real-living-wage to find out more.

Douglas White is joint interim chief executive at Carnegie UK Trust

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