Living Wage and Beyond

By 18/07/2016Blog, Events
Written by Kate Fowler

Last week’s event, ‘How to create good jobs in low wage sectors’, organised by Oxfam and the Living Wage Foundation, was an insight into the benefits for both employees and employers not only of the living wage, but also of a general improvement in working conditions.

Why is change needed? Business can have a huge impact on employees’ quality of life. Graham Whitham, Oxfam Senior Policy Advisor on UK Poverty and Inequality, spoke of the two different narratives regarding employment that have emerged since the2008 financial crisis. The first is one of record employment rates, while the second is one of a rise in zero hours contracts, the persistence of the gender pay gap, and increasing work instability. Low paid sectors are expanding, and employees in these jobs struggle to access jobs in high paid sectors if their employers don’t invest in them. Regulation is important, but it doesn’t do enough on its own to ensure a good quality of life for all those in work: 60% of adults in poverty are in work, and two thirds of children in poverty live in working households. For these people, work clearly isn’t offering a way out of poverty.

And money isn’t the only problem. As I experienced myself when I worked in retail last year after graduating from university, unpredictable shifts make it difficult to have a life outside of work, and the feeling of being undervalued by management creates a lot of frustration. This not only has a negative impact on employees and their families, but also rebounds onto the employer, as dissatisfied and demotivated employees are less productive and provide poor customer service.

Three companies spoke at the event about the reasons behind their decision to become Living Wage Employers – high staff turnover for EE, company culture at BrewDog, and IKEA’s strong values. All three also realised it wasn’t a one-stop solution and took further action. They have all worked to accommodate employees’ requests for increased hours to allow a sufficient and more stable income. And they have all felt the benefits. EE staff turnover is down 25%, and they, like IKEA, expect to see a corresponding increase in customer satisfaction. BrewDog, who have also invested in staff training, have seen managerial positions filled by internal promotions more than double to 89%. This means existing employees realise their potential, whilst the company has managers who already understand the company, its values and its products.

So what next? The Living Wage Foundation has created a Good Jobs in Retail toolkit, to help employers move to a Living Wage in a way that benefits both employees and employers. But, as outlined above, paying the Living Wage can be part of a wider improvement in how a company operates and treats its employees. A US study by Zeynep Ton found that the world’s most successful retailers operate with slack, deliberately having more employees working than required, to improve customer service and engage employees in thinking about how to improve procedures. They also invest in training their employees to allow increased flexibility, so that an employee can fulfil their customer facing role in busy periods, but complete other tasks in quieter periods. Improved customer service benefits the employer, but such changes also create more fulfilling work and standard working patterns as each employee can adapt to the needs of the employer during their shift, rather than the number of employees working constantly being tailored to customer footfall.

We also need to change perceptions. Low-paid jobs are such because they are not highly valued. But many of these sectors, such as social care and child care, are vital to society. A change in how we value these jobs, and so how we remunerate workers in these sectors, would have a major impact on their quality of work, and their quality of life.

Blueprint challenges the notion that people are predominantly self-interested. People will act self-interested when they feel threatened, or when they are treated as though they are self-interested. The perception of employees as stop-gaps in industries such as retail is self-perpetuating. If employers assume employees won’t stay and so pay low wages and don’t invest in them, it is no surprise that employees leave. But there is an alternative: if people are trusted, given freedom with responsibility, and made to feel valued, they will feel part of something and want to contribute, and this in turn will lead to higher employee satisfaction, which can only be a good thing for both employee and employer.