WAGES fuel economies; so giving low paid workers a pay rise won’t just be helping to tackle poverty, argues a new report welcomed by civic leaders in Sheffield City Region.
The Smith Institute report, commissioned by the Living Wage Foundation (LWF), claims that if just a quarter of those living on low incomes in the UK’s 10 major city regions saw their pay raised to the real Living Wage, then those areas could benefit from a £1.1 billion boost to the economy.
Closer to home, for the Sheffield City Region at least, the report — The Local Living Wage Dividend — found that if a quarter of all low paid workers in the Sheffield City Region were given a pay rise to the real Living Wage (currently £8.75) then 36,250 people would see an average annual pay rise of £1,020, or an extra £20 a week.
It is claimed that this increase in wages would also provide:
- A £22 million boost to the local economy
- A £13 million tax and benefit dividend to HM Treasury
- A £41 million economic boost to the city region’s economy if half of the £13 million boost to the Treasury was returned to Sheffield, considering wider economic benefits such as increased local spending by low paid workers
Sheffield City Region has the highest percentage of employees earning below the real Living Wage than any other region considered in the report. There are currently 145,000 earning below the real Living Wage, a total of 27% of all workers in the Sheffield City Region.
“I welcome The Local Living Wage Dividend report commissioned by the Living Wage Foundation,” said Dan Jarvis, the city region’s mayor. “It is concerning that Sheffield City Region has the highest percentage of employees earning below the real Living Wage of all the regions considered in the report.
“Ensuring that people are paid a proper wage which meets the cost of living is vital for residents and good for the economy. That’s why as Mayor I have committed to championing the Living Wage for all employees of the Sheffield City Region and those companies that we contract with. I would encourage employers from across the region to take the same steps.”
Sheffield-based Living Wage employers include MJ Glesson, Wrigleys Solicitors, Sheffield Young Carers Project, and Seven Hills Bakery.
The report highlights the role that leading local public and private sector employers such as universities, hospitals, football clubs and city airports can play in providing leadership on the Living Wage. It calls on metro mayors and local authorities to work with these key ‘anchor institutions’ to drive Living Wage take up in their towns, cities and regions, and to integrate the Living Wage to their economic development strategies. It recommends that they:
- Become accredited Living Wage employers
- Set clear targets for Living Wage take up in their cities and regions, and develop a plan with other key local ‘anchor institutions’ for how these will be met
- Use their powers of planning and public procurement to encourage more local employers to commit to ensure their staff can live on
- Investigate the potential to create new real Living Wage buildings, zones and hubs in key public spaces
“By championing the real Living Wage leading mayors and local authorities can build successful, dynamic local economies – and most importantly ensure that the proceeds from growth are fairly shared,” said Lola McEvoy, senior campaigns manager at the LWF.
“There are some fantastic organisations in Sheffield already paying the Living Wage, but we must see more step up to tackle problems of in-work poverty, regional inequality, and weak productivity.”
Paul Hunter, deputy director of the Smith Institute, added: “Big employers often like to talk about the positive role they play in their local community. One way that they can go beyond the warm words is to pay their staff the Living Wage and demand their suppliers do the same. This is not just about good corporate citizenship. Evidence shows workers paid fairly are more productive. The local economy in Sheffield could be boosted by £41 million if just 25% of those currently earning below the Living Wage were uplifted.”