Benefits of London ‘living wage’

Paying a 'living wage' has a range of potential benefits to workers, companies and the government, according to an academic study commissioned by campaigners. The study looked at the experiences of workers and companies in London where the living wage has been introduced.

The London living wage was calculated to be £8.30 an hour in 2011, based on what was needed by the average household type to cover basic living costs. This compares with the current statutory minimum wage of £6.08.

Key findings

  • Over half of employees (54 per cent) felt more positive about their workplace once the living wage was introduced. Staff leaving rates fell by 25 per cent.
  • Reputational benefits to companies were significant, including helping to attract new business/customers and recruiting professional staff.
  • Wage cost increases associated with the living wage averaged 6 per cent, despite low-paid staff receiving much higher increases than this in their hourly rate of pay (an average of 26 per cent). The cost increase was offset through savings such as new working practices, lower management overheads, and in some cases reduced working hours.
  • The London living wage made a significant difference to the disposable income of households that did not claim (or were ineligible to claim) social security benefits and tax credits.
  • If all low-paid Londoners were paid a living wage this could save the government £823 million a year by increasing the tax base and reducing benefit spending.

Source: Jane Wills and Brian Linneker, The Costs and Benefits of the London Living Wage, School of Geography, Queen Mary University of London
LinksReport | Summary | Queen Mary University press release | Trust for London press release | Operation Black Vote press release

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