Real Living Wage increase; What does this mean for your business?

The text Living Wage on a running track

Real Living Wage increase - Image Source Canva

We at Samtaler are one of over 11,000 employers accredited by the Living Wage Foundation. However, with increasing energy costs causing many businesses to feel the strain, voluntarily paying employees the 10.1% wage increase could present some challenges to businesses, particularly those delivering contracts in the public sector with Living Wage commitments.

In this short piece, we will outline five things to consider if your organisation has existing social value commitments based on the Living Wage to adapt effectively and ensure you deliver on your commitment.

What is the Living Wage?

The new real Living Wage rates are £11.95 per hour in London and £10.90 per hour across the rest of the UK. It is a voluntary rate paid by employers that choose to pay above the government minimum.

Five things to consider if your organisation has committed to paying the Living Wage in a bid

1. Communicate with HR 

Ensure that your organisation’s HR/Payroll teams on contracts with living wage commitments are aware of the increase so that it can be reflected in the salaries of workers who are paid a Living Wage.  

2. Communicate with employees 

Have a plan to communicate with contract workers who are paid a Living Wage, so they know when the increase will appear on their payslips.  

3. Communicate with procurers 

Make sure that your organisation communicates with procurers to let them know you have a plan and what that plan is. 

4. Know your commitments 

Review any bids with Real Living Wage commitments and factor in the additional costs of the increased Living Wage for the number of people paid on the contract. If it is a multi-year contract, and you have many workers on Living Wage, the costs could be significantly different, and you don’t want to be caught out.

In the same way, we suggest that you factor in further increases, particularly if your organisation is delivering a multi-year contract. 

5. Think about the rest of your workforce

It is important to note that this wage inflation only applies to those already earning the Living Wage; you are not obliged to pay anyone not already on living wage the inflated rate. However, some employees may now earn less than those on the new Living Wage. Alternatively, you may have a staggered pay system to reflect progression. If this is the case, you may need to raise some other rates to keep the differences between the lowest level and those immediately above it the same proportionately.

Four Hands joining together

Photo by: krakenimages on Unsplash

The bigger picture

Research conducted by the Cambridge Institute for Sustainability Leadership, Business Fights Poverty and Shift earlier this year revealed that paying the Real Living Wage can improve business performance while also tackling poverty and inequality, improving employee wellbeing, and improving your organisation’s reputation.

Some Useful Links

Check out the Real Living Wage website for plenty of useful information, and start your journey to become an accredited Living Wage employer here. 

Listen to this short podcast episode by Good Employment Chatter on the benefits of being a Living Wage Employer. 

 

“Paying the real living wage is a critical step in supporting employees to cope during the cost of living crisis, as well as marking a long-term commitment to offering good work,” - Nicola Inge, Employment and Skills Director at Business in the Community.


How we can help

At Samtaler, we understand the importance of your social value commitment. You’re here because you care about the impact your business has on society and want to be better. We want you to succeed, and we know from experience that achieving social value requires skill, strategy, and support.

To find out how we can help send an email to hello@samtaler.co.uk

Sign up to The Social Value Files for inspiration and practical ideas to create social value for your business.

 

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