The economic fall out from Covid has been substantial. However, it has not been evenly felt. This is especially true for the labour market with low paid workers more likely to see their hours and pay fall and more likely to be made unemployed or furloughed. Indeed, the pandemic has placed the spotlight on low pay and in-work poverty. Recent polling for the TUC, for example, showed how low-income workers have borne the brunt of the pandemic with little or no option to work from home and reduced living standards.1
Low paid workers remain at the highest risk of contracting the virus at work and many do not have decent sick pay. Yet, it has been the low paid – particularly in healthcare and other essential services – that have kept the economy moving. This unfairness has not gone unnoticed. As the furlough scheme and other Covid protection measures are relaxed, local and national politicians from all parties are calling for a recovery that is both fair and sustainable. That agenda for ‘levelling up’ and ‘building back better’ must have the real Living Wage and tackling insecure work at its heart.
Living Wages have been backed by local and national politicians as a central part of such efforts to build a stronger, fairer economy – including in the recent mayoral elections. The Living Wage is a voluntary pay rate independently calculated and based on meeting people’s everyday needs (and is currently £9.50 across the UK and £10.85 in London).2 Over 20% of the workforce are currently paid below the real Living Wage. Those paid below the Living Wage are also more likely to be women, work part time, and be employed in the leisure and retail sectors. As such The Living Wage makes a significant and lasting difference to low paid workers, helps combat poverty and narrow the gender pay gap. It also creates benefits for employers. According to the Living Wage Foundation, “all of our Living Wage Employers have recognised that paying the real Living Wage has improved their resilience to the crisis, and bolstered their ability to emerge from it in a position of strength.”
Despite the pandemic the Living Wage has continued to expand. The number of accredited employers has increased from 2,000 in 2016 to over 8,200 today, including over 3,000 since the start of the pandemic last year. Together this put over £1.5bn back into the pockets of over 275,000 low-paid workers.3 And offering tangible productivity and other benefits.4 In the past few years the movement has also diversified into new areas, including ‘Living Wage Places’ – launched in 2019 to create cross-sectoral action groups of local Living Wage employers working together to expand take-up of the Living Wage in targeted locations.5
Increasing coverage of the Living Wage can open up wider benefits for local economies. Before the pandemic, the Living Wage Foundation, for example, have been working closely with councils and local employers on ways of increasing the take up of the Living Wage. As a result of these consultations, the Living Wage is now present in many local authority economic development strategies.
This report seeks to take forward the work of the Foundation’s ‘Living Wage Places’ initiative, focusing on how to maximise the benefits of the Living Wage in towns, cities and city-regions across the UK. Using evidence-based assumptions, the report examines and quantifies how much individuals gain, how that wage uplift is paid for and what the local economic impact is likely to be based on moving 25% of low paid workers up to the Living Wage.