A £100m bonus has been paid to some of the country's lowest-paid workers over the past decade by employers who have signed up to paying above the statutory minimum wage. Ten years of work by the Living Wage campaign has yielded £96m in topped-up wages for thousands of workers, according to new research. The campaign, spearheaded by Citizen UK, calls for every worker to earn enough to provide their family with the essentials of life, which it says are not met by the national minimum wage. Now, some of the country's most prestigious employers are expected to boost that figure dramatically as firms buy into the idea that paying staff more increases productivity.
The study, by Queen Mary College, University of London, reveals that more than £33m extra has been paid to workers on the so-called "living wage" – an hourly rate set independently each year, calculated to allow workers to pay for essentials – since 2010. Firms including Bank of America, Goldman Sachs, L'Oréal and the retailer Lush have committed to paying £8.30 an hour rather than the national minimum wage of £6.08 for staff in London who are over 21.
One in five workers across the UK – and one in six in the capital – is paid less than the living wage. But more than 130 London employers have signed up to the campaign, a threefold increase since 2008, and it is now being rolled out nationally. Campaigners believe that this year politicians across the country will give support by boosting pay rates in the public sector.
London's Mayor, Boris Johnson, said: "More and more organisations recognise that it suits them as well as their staff" to pay the rate. He added that the policy was a "win-win for employers", fostering a "loyal and motivated workforce" and helping to "boost the capital's economy". Richard Reid, London chairman for KPMG, said that since the company had introduced it, staff turnover had fallen and productivity increased.
The Scottish Executive – which pays its directly employed staff the living wage – is considering making the wage a requirement of all its government-awarded contracts, pending EU legislative inquiries. KPMG and PricewaterhouseCoopers have become the first firms to pay the living wage nationwide and campaigns are running in Brighton, Preston, Milton Keynes, Newcastle and Wales, where the regional rate is set at £7.20.
Rhys Moore, director of the Living Wage Foundation, said: "2012 brings the first ever Living Wage Olympic Games and we are hoping to make progress in sectors where low pay is the norm, such as retail."
Launched by a collective of church leaders and trade unions in 2001, the idea has stern critics. The Greater London Assembly insists an hourly wage rate of 22 per cent above the national minimum wage is needed just to take wage-earners in London out of poverty, but senior industry figures believe a widespread living wage policy in an economic downturn would be irresponsible. Neil Carberry, the director of employment at the CBI, warned that it "puts up barriers for the labour market". Some academics fear higher wages for some low-paid workers could shift the emphasis away from government support.
Despite the reservations – and just one retailer signing up so far – some of the biggest names in the financial sector have adopted the policy, including Barclays and HSBC, accumulating more than £20m for low-paid workers, in particular those employed via agencies. The GLA and related bodies, including Transport for London, now pay all staff the living wage, despite mixed views at Westminster.
Ed Miliband, the Labour leader, pledged his party would offer tax breaks to companies paying the living wage in his manifesto last year, and the Prime Minister said it was an "idea whose time has come".
In the public sector, the Department for Children, Families and Schools has adopted the policy, along with councils in Islington, Hackney and Lewisham, but the Department of Work & Pensions and the Foreign and Commonwealth Office (FCO) have not, saying it is up to their contractors to decide what wage to pay their employees.
Joseph, a 41-year-old cleaner, is leading the campaign for a living wage inside the FCO with a petition signed by 50 cleaners. At one time he earned £40,000 a year as an IT engineer, but he was made redundant two years ago and now earns £6.15 an hour working as a subcontracted cleaner for the Government. "People I work with have to do loads of hours just to survive; some are on 14-hour days," he said. "If they are going to pay our colleagues in Lewisham the living wage, we deserve the same treatment."
Jane Wills, professor of Human Geography at Queen Mary, who carried out the research, said those who have benefited from the campaign represent a "drop in the ocean". Citizens UK is in talks with its biggest retailer yet, Tesco, but Mr Moore said: "There is still a lot to be done."