Twenty years of the Living Wage - The Employer Experience

Report summary

To mark 10 years of Living Wage Employer accreditation, we joined up with Cardiff Business School to survey our accredited Living Wage Employer network in 2021, and received 1532 responses (22 per cent of our network). The survey sought information about:

• Why employers had joined the scheme?
• How they had implemented the Living Wage within their organisations?
• The effects of accreditation on business performance.
• How many and who amongst the workforce had benefited from the Living Wage?
• Whether employers were committed to maintaining their accreditation.
• The survey also inquired into employer views on new standards, such as Living Hours and the Living Pension.
• How they had been affected by the COVID pandemic?

In the report below, Cardiff Business School have analysed responses to present a broad account of how accredited Living Wage Employers have been affected by their membership of the Living Wage network.

A summary of the main findings of the study are as follows:

• Reasons for joining the network. For most employers, the decision to join the Living Wage network was a complex one, informed by multiple considerations. To the fore, however, were ‘expressive’ motives; a desire to be a good employer, support the Living Wage campaign, and act in accordance with organisational mission and values. Many employers referred to an intention to ‘do the right thing’. Instrumental motivation was also important, with many employers joining the scheme to improve aspects of HRM, such as recruitment and retention, or to secure contracts or investment. 
• Implementing the Living Wage. Most employers implementing the Living Wage had briefed their managers and workforce about the standard in advance and had raised the basic rate of pay, rather than introducing the Living Wage as a pay supplement. Very few reported that they had withdrawn other elements of remuneration to fund the scheme or that they had reduced hours of work or the size of the workforce. The survey uncovered virtually no evidence of claw-back; of employers reducing other terms and conditions to pay a higher basic rate. 
• Impact on employers. Virtually all employers responding to the survey reported that signing-up to the Living Wage had had a positive impact on their organisations. The main types of benefit identified were reputational gains, followed by HR benefits, with commercial gains, such as winning contracts or attracting customers coming third. 
• Number of employees benefiting from the Living Wage. Since its inception the Living Wage accreditation scheme has led to a substantial increase in hourly pay for about 400,000 UK employees. Cardiff Business School's cautious estimate of the total wage transfer since 2011 is more than £2bn. Employers responding to the 2021 survey reported that more than 40,000 direct and contract employees had or were about to receive a Living Wage pay increase and a breakdown of this figure revealed that the impact was concentrated in large organisations, in low wage industries, such as retail and social care, and in London and Scottish-based employers, where take-up of the Living Wage has been greatest. The analysis also showed that the Living Wage has been particularly impactful in the public sector, with local authorities and NHS Trusts tending to report a large number of beneficiaries.
• Types of employees benefiting from the Living Wage. One important finding here was that those receiving a Living Wage pay increase disproportionately work part-time. Part-time work is often poorly paid and undervalued and is largely performed by women. The scheme has also raised the pay of many thousands of contract workers. The survey also indicated that women employees form a majority of those benefiting from the scheme, amongst direct employees, in a majority of participating organisations. Young workers and black and minority ethnic workers rarely constitute a majority of benefiting employees, but they are reported to have gained directly from the Living Wage by a substantial minority of employers. The survey revealed that a very broad set of low-wage occupations have gained from the Living Wage, with the most frequently reported occupations being clerical or administrative assistant, cleaner, receptionist, warehouse operative, and care worker. 
• Continuing support. Nearly all employers responding to the survey (99 per cent) reported that it was ‘likely’ or ‘very likely’ that they would continue with their support for the Living Wage.
• Additional standards. Shortly before our survey was released the Living Wage Foundation had launched the Living Hours standard and, more recently, it has launched the Living Pension and the Global Living Wage Affiliate Network. The responses revealed strong support for Living Hours with more than half of employers saying that they would ‘definitely’ or ‘probably’ adopt the new standard. Nearly 80 per cent of survey respondents stated that they would consider signing up to a voluntary pension standard for low wage employees. 
• Impact of COVID. Most employers reported that their organisations had been negatively impacted by COVID and about two thirds had made use of government support schemes to maintain employment. Despite adverse effects, however, the vast majority of employers denied that COVID had weakened their support for the Living Wage, and many reported taking additional steps to protect the incomes of low-wage employees. There was very strong support amongst employers for policy to raise the incomes of ‘key workers’, who had kept working and supported the public during the pandemic.