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The living wage on its own won’t win the war on poverty

Poverty is about more than just the living wage. Shutterstock

The living wage won’t eradicate poverty in the UK. It may seem churlish to make the point as Living Wage Week draws to a close, but it’s a point well worth making.

Don’t get me wrong, the living wage campaign is a just cause and can take pride in its many achievements since London Citizens launched it in 2001. Estimates suggest that the campaign has generated more than £210m of additional income for some of the lowest-paid workers in the UK.

There are few anti-poverty UK campaigns whose principal partner organisations include blue chip companies like KPMG, Aviva, Linklaters and Nestlé. While a move to make the hourly £7.65 living wage part of all public sector contracts was defeated in the Scottish parliament, a provisions was added to new legislation which meant firms seeking public contracts would have their willingness and ability to pay the living wage assessed by local authorities in Scotland.

Plans are afoot in Brent council in London to incentivise companies to pay a living wage by offering business-rate discounts. And more than 1,000 organisations in the UK are now accredited living wage employers, a list which includes my own employer, Glasgow Caledonian University.

Minimum wage shame

So what’s the problem? Well, there are four. First and foremost, it highlights that there is something fundamentally wrong with the national minimum wage in the UK. If it takes a wage of £7.85 per hour to meet the basic cost of living in the UK (£9.15 per hour in London), then it is a national disgrace that the government permits employers to pay their employees, the people who create their wealth, anything less (£1.35 per hour to be exact, or £2.65 less in London).

Platitudes abound from politicians about “making work pay”. The reality is that many are more concerned with “making work pay relatively more than welfare” than ensuring an hourly working rate that provides for the basic cost of living. So while we should applaud organisations that increase their employees’ hourly rates to reflect living-wage levels, we must not lose focus on the pressing need to increase the minimum wage.

Second, an hourly rate of pay is only an effective tool for eradicating poverty when enough properly paid hours are available. The scourge of zero-hours contracts and the fact that more than one in every four workers in the UK describe themselves as part-time mean that even a living wage is insufficient to ensure that many escape poverty.

A related point is that avoiding poverty depends on household composition. Two workers paid the same living wage will have different poverty outcomes if one wage supports the individual worker alone, while the other supports a partner and children. Although it would be impractical (and illegal) to suggest that employers remunerate workers to reflect household circumstances, it must be acknowledged that even a living wage is insufficient to ensure that all workers and their dependents escape poverty.

Risks to the poor

Finally, “making work pay” does nothing to address the quality of life of those who cannot work. Let’s not get distracted into blindly campaigning for decent pay without acknowledging that, inadvertently, this might add grist to the mill of those who are comfortable peddling the notion that there is a deserving poor (who work) and an undeserving poor (who do not).

In a just society, efforts to increase the pay of those who are inadequately rewarded for their labour must be balanced by as much effort to avoid the intensifying poverty being thrust upon those who rely on welfare.

Let me be clear, I firmly believe in the living wage campaign. There was a recent case in Scotland where the CEO of a large institution that prides itself on its charitable heritage was rewarded with a financial package amounting to almost £1m for a year’s work, while recommending to his board that the lower-paid staff should not have their income raised to the living wage.

The living wage campaign provides a means to challenge these kinds of inequities – and at the same time challenging the perverse adage that “we pay the rich more to make them work hard, while we pay the poor less to achieve the same end.” But, in the final analysis, if tackling poverty is a war then the living wage is only one of many battles that must be won.

Next, read this: The living wage may cut poverty, but not by very much

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