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More employers should commit to paying the living wage

11 Dec 2019 By Emma Cooke

Half of families living in poverty have someone in work. Emma Cooke explains how businesses can help reverse the damning statistics

The latest Monitoring poverty and social exclusion report from the Joseph Rowntree Foundation found 55 per cent of families living in poverty have someone in work – the highest proportion on record. When Philip Alston, the UN special rapporteur on extreme poverty and human rights, visited the UK, he made clear in his statement that “more and more working people are trapped in poverty by a rising tide of low pay, debt and high living costs". 

There are now almost four million workers in poverty in the UK, a rise of more than half a million compared with five years ago. And despite record employment, the proportion of children in poverty with working parents has now reached an all-time high of 72 per cent. Two decades ago, it was barely half.

The Trussell Trust, the charity behind the UK food banks initiative, has found that the use of food banks is rising. It distributed 1.6 million three-day emergency food supplies to people in crisis last year – a 19 per cent increase on the previous year. When asked about the rise of food banks and poverty in Britain, Archbishop Desmond Tutu said: “There comes a point where we need to stop just pulling people out of the river. We need to go upstream and find out why they’re falling in.”

In-work poverty is a complex issue; the housing crisis, insecure work, changes to benefits and tax credits, and slower wage growth all play a part. However, there is one clear thing that employers can do to help lift people out of in-work poverty, which is to pay a living wage.

The Living Wage Foundation campaigns for people to be paid an hourly rate that accurately reflects living costs. The rates are calculated annually and are based on the best available evidence on living standards. They take into account rent, childcare, travel costs, food and household bills.

Becoming a living wage-accredited employer means paying not only those employed directly, but also third-party contractors, a fair day's pay for a hard day's work. There are now more than 5,000 accredited living wage employers, including a third of the FTSE 100 and big household names like Ikea, as well as local coffee shops and pubs.

Herbert Smith Freehills was an early adopter, becoming accredited as a living wage employer in 2012, joining more than 90 others at the time. During the summer of this year, we reflected on the last seven years and spoke to some of the employees from our onsite contractors to understand what earning a living wage means to them. Although they work for separate companies, they are part of the HSF family. All those we spoke with said working at a site that was an accredited living wage employer gave them a better quality of life compared to their friends and family who were not paid the real living wage. They said friends working for other companies often work longer hours and sometimes have a second job to earn the same monthly salary. Those with families said this dramatically reduced the amount of time they can spend with loved ones. 

We urge all HR professionals to encourage their employers to join the living wage movement and help us reduce in-work poverty. And as consumers, we can all do our part by choosing where to spend our money to support people out of poverty.

Emma Cooke is head of citizenship at Herbert Smith Freehills

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