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The 'living wage' vs national minimum wage: What you need to know.

This week marks the #LivingWageWeek promoted by the Living Wage foundation.

Wages are a focal point in the jobs conversation. With really high employment levels, the real task for businesses is finding the right candidates for the right price. But how do businesses know what the right price is in a candidate led market?

Why a living wage?

A living wage is similar to the principle of a minimum wage, covering all roles and aims to become a new basic wage for all workers. The Living Wage foundation states that the government minimum wage is not enough to live on comfortably.

There are groups within business and individuals within politics that are urging employers to pay the living wage. The calculation of the living wage takes into account the cost of living, whereas the minimum wage is a percentage of the medium of earnings, which is less reflective of current needs/costs of living.

A living wage allows your employees a bit more peace of mind. The piece of mind that comes with higher wages.

But is there a need for this?


Transparency is changing, and with it, perceptions of a fair wage. Take job hunting.

There is a plethora of tools available for the savvy job hunter. Transparency in the job search market means that candidates know how much they are worth, well before any job offers are offered. The key thing to remember is that we are in a candidate led job market. High employment means that the people with the skills needed are generally employed already.

To tempt them away, employers must to be aware of their needs, wants and fears. Take the candidate journey for yourself. Find their ‘perceived’ worth and pay them for it. These days, Glassdoor and other employment websites help to inform your candidates before they even meet you, so you should be ready for any questions they have.

After all, candidates hold the power at the moment, so it’s best to be prepared.

Example of a Salary comparison site

As can be seen, transparency can have a massive effect on many different parts of life. Wage transparency is increasingly important and increasingly easy to access, and organisations should be aware of this.

Note that although wages are a crucial attraction to candidates, millennials are critically motivated by more intrinsic factors. For example, millennials crave authenticity, feedback and much prefer being able to relate to their managers – transparency can help with that.

So growing transparency, the changing habits around motivation and social media constantly showing ‘how the other half live’, it’s no surprise that a living wage is a popular thought.

How does it fair in reality?

The figures

What are the actual results of a living wage?

A recent survey by the Living Wage Foundation showed that a living wage does have positive effects on staff. From a branding perspective, it improves business reputation, which improves prospects moving forward. In addition, motivation and retention is increased, meaning it may have more direct, tangible results.

The results appear to be effective, but similar to other employee focused activities, like volunteering schemes, or CSR programs ran by some organisations. So is the living wage the most cost effective way to achieve the above benefits?

Like most things, it may depend on the organisation. For a FTSE 100 company, with a stellar CSR policy and other employee focused policies, it may be that additional thing to attract more talent in an uncertain economy (say Brexit?), but this is simply speculation.

Is the living wage right for my business?

There has been an overabundance of research into practices like transparency, fair pay and employee recognition. Their existence in an organisation is proven to increase productivity and engagement in employees, making the workplace better.

To say it is the only way to ensure employee happiness, or to ensure they have dignity, may be over-exaggerated claims.

If you find a practice, whether it’s: CSR, employee volunteering, staff team-building or raising wages across all functions, you need to decide if it’s right for your business.

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