The Living Wage Briefing for Members

The Living Wage Briefing for Members

The Living Wage Experience of the Sector Northern Housing Consortium (NHC) members are starting to see the early signs of the impact welfare reform and the changes to the benefit system are starting to have on the ground, amongst their tenants and communities. There are huge concerns around what this is really going to mean for families with children, those seen as vulnerable and the increase in numbers of those living in poverty. In the current tough economic climate where families and individuals are already struggling this is estimated to get worse, and issues around child poverty and in work poverty are really starting to take effect. The Living Wage is an hourly rate that is set independently and updated annually, its calculation is set according to the basic cost of UK living. The UK Living Wage is calculated by the Centre for Research in Social Policy, and is currently 7.45 per hour. The London Living Wage is calculated by the Greater London Authority, and is currently 8.55 per hour. Employers choose to pay the Living Wage on a voluntary basis. According to the Living Wage Foundation, Living Wage employers report improved morale, lower turnover of staff, reduced absenteeism, increased productivity and improved customer service. Between them, the employers committed to paying a Living Wage have lifted more than 45,000 families out of working poverty. Over 200 employers from every sector are now paying accredited Living Wage employers. Adopting the Living Wage pledge provides an opportunity to raise income levels, tackle financial exclusion, tackle poverty and address health and wellbeing issues, which some families and individuals are experiencing increasingly on a day to day basis and overall improves life prospects. From a business perspective it improves staff morale and saves money on areas around recruitment and staff absenteeism, and provides a new stimulus to the local economy and there are also considerable reputational benefits to being associated with the Living Wage. Experience has shown that the potential increase in costs of adopting the Living Wage across a business is less than anticipated in most cases because paying higher wages reduces turnover and absenteeism costs and makes workers more motivated to keep their job/s. This briefing paper outlines the experience of a number of NHC member organisations who have signed up to the Living Wage, including some details of costs, the business and individual case of signing up to the Living Wage Pledge, the impact and the reasons why organisations have gone down this route. 2

Yorkshire Coast Homes Yorkshire Coast Homes (YCH) is a not-for-profit housing association providing 4,300 high quality homes for rent to people in Scarborough, Whitby, Filey and surrounding areas. When YCH looked into becoming a Living Wage employer there was no extra cost - as all their staff that were directly employed by them were already paid at a level above the minimum wage anyway (apart from several apprentices who are exempt). As a result of this, YCH complied and were accredited as a Living Wage employer through the Living Wage Foundation. Chief Executive Shaun Tymon commented: I feel there are real benefits in that our staff recognise that we value them and we are sending out a message that we take our commitment to support staff seriously. We are committed to being an excellent employer and have Investors in People Champion status. Paying staff at a level below which, by definition, they can t maintain a certain standard of living, completely undermines this. To date YCH have not rolled this out through their procurement chains via contractors and suppliers, as all of their repairs and maintenance and gas servicing services is provided in house, so the majority of the staff are paid the Living Wage. There may be a small number of contractors they use for specialist work that don t meet the Living Wage requirements, but this is something they will be working on over time. For further information please contact Shaun Tymon, Chief Executive, shaun.tymon@ych.org.uk 3

Salix Homes Salix Homes operates in some of the poorest performing places in the Greater Manchester Region. Salford is the 15 th most deprived authority in England: Where almost half (48%) of residents living in neighbourhoods classed as within the worst 10% nationally Salford suffers from poor health, high benefit dependency, low household income and has a relatively younger and older population Crime levels are higher than average and educational attainment is lower than average As a Housing provider Salix provide training and employment opportunities for their customers, apprenticeship schemes, entry level posts, and work with a number of construction partners and wants to be the employer of choice. Benefits to the Organisation Reputation as an Employer of Choice Ethically and morally the right thing to do Role model in social housing Encourage supply chain to follow suit Encourage the local community to believe that work pays Makes business sense It took six months to achieve accreditation, due to the contract Salix Homes has with Salford City Council and their employees earning less than the Living Wage, staff were TUPE across from a security company on minimum wage. Salix Homes was accredited in June 2012. Salix homes were already paying the Living Wage right across their different employee groups, in relation to the council the employee was on an incremental salary band and once they had progressed through the salary band they were on the Living Wage, so there was no extra cost to the organisation. In terms of the TUPE staff - money was saved through a security review on service charges and the change of T&C s was built into the business case. For further information please contact Alison Hamnett, Director of Improvement & Customer Services, alison.hamnett@salixhomes.org 4

Vela Group The Vela group was formed in 2010 and brought together Housing Hartlepool and Tristar Homes; together they have over 17,000 homes across Stockton, Hartlepool and the North East. The majority of their homes are for rent but also include shared ownership, right to buy, outright sale, sheltered and extra care schemes. Alongside proving high quality homes Vela also offer a range of services including training and employment services - helping people to change their lives. The Vela Group prides itself on valuing its employees; they had established that they were already paying well over the Living Wage. Signing up to the Living Wage promotes a positive message to their employees and the communities they serve. The Group recognises that employees will have a better standard of living than deciding against signing up to the pledge, it also shows that Vela values their employees by paying above this rate. It cost approximately 1000 to sign up. The process was really simple and support was there at the end of the phone when they had any queries. Liz Thompson, Group HR Operations Manager would encourage other organisations to sign up to the Living Wage. For further information please contact Liz Thompson, Group HR Operations Manager, liz.thompson@velagroup.co.uk 5

Fabrick Housing Group Fabrick Housing Group was already committed to offering excellent terms and conditions for staff and meeting their priority of being employer of choice. However they were also acutely aware that they operate in some of the most deprived wards in England, with residents in more than 1,600 of their properties affected by the under occupancy charge (bedroom tax). They also looked at lifestyles and were aware that working one Living Wage job as opposed to two minimum wage jobs made a huge difference to families and their lifestyles. Fabrick Housing Group pledged to meet the Living Wage in February 2013 in line with their commitment to the North East Child Poverty Commission, meaning 29 people received a pay increase of around ten per cent. This meant a cost of 16,000 per annum to the group but in terms of reducing absenteeism, retaining staff and boosting morale, they have made real savings and improvements. An independent study of the business benefits of implementing a Living Wage policy in London found that more than 80% of employers believed that the Living Wage had enhanced the quality of work of their staff, while absenteeism had fallen by around 25%. Two thirds of employers reported a significant impact on recruitment and retention within their organisation. Also, 70% of employers felt that the Living Wage had increased consumer awareness of their organisation s commitment to being an ethical employer. As an added boost, Fabrick Housing Group bosses cemented the commitment by making a decision to encourage suppliers to join and sign up to the Living Wage Foundation s call to raise the pay of any staff members that earn under the standard, up to that amount. Heather Ashton, Group Director of Finance and Corporate Services for Fabrick, said: This is really important to us as an employer and we want the Living Wage to become a real consideration for businesses that become our suppliers too. We work very closely with local suppliers and when we award a contract, we will offer them a fair price to make sure they can provide the Living Wage. Fabrick is now going for formal accreditation from the Living Wage Foundation. For further information please contact Helen Sturdy, Communications & Media Officer, Helen.sturdy@fabrickgroup.org.uk 6

Preston - A Living Wage City The minimum wage was an important development to ensure a basic level of income for the lowest paid. However, the cost of living in Preston has risen substantially in recent years, and the minimum wage is not enough for an individual or family to avoid living in poverty with all the ill effects that has. A Living Wage is considered the minimum wage needed to provide 'adequate income' to ensure social inclusion for an individual and their family. Paying a Living Wage also helps an organisation or business as it has been shown to reduce staff turnover, reduce sick leave and improve productivity. Back in 2009 the Welsh Assembly agreed a Living Wage of 6.70 per hour for its employees, and employers in London agreed a Living Wage of 7.20 per hour. It was suggested that Preston use 7 per hour as a rate for Preston (up rated annually). Preston paid their staff from the 1st April 2009 which included all their directly employed staff and agency staff. They entered into a Framework agency contract and paid and still pay the Living Wage for agency staff e.g. refuge workers etc at the time of implementation it cost the Council 40k and affected circa 100 staff. To promote the economic and social well-being of people living and working in Preston, Preston City Council believes that everyone working in the city should be paid a Living Wage. As one of the city's major employers, the City Council help make sure this happens by becoming a Living Wage employer, and by working with other employers in the city to persuade them to follow their lead. Since then they have increased the Living Wage in line with the National Out of London Living Wage rate and pay 7.45 per hour at the moment. Over the time they have been paying it they have benefited around 500 staff and still manage to keep it in line with the national pay scales. Preston has also made strides in terms of implementing it in their procurement processes. In 2011 council approved their Living Wage Policy which addresses procurement issues. They do not buy in a lot of qualifying services i.e. a lot of services bought in by the council relate to services which are well above the Living Wage rate. Preston has participated in Living Wage week in 2012 and 2013 and held a stall in Preston s market square and promoted the Living Wage to the people of Preston via flyers and messages. They did this with other organisations in Preston who pay the Living Wage including KPMG and Preston Domestic Violence Services. Preston City Council state they are a Living Wage employer on all of their emails and have developed a form (like Glasgow) where upon business can put on website if they pay the Living Wage it s not accreditation and it doesn t publish details of what they pay. They have also established a Social Forum in Preston and it is made up of a number of voluntary sector organisations and others and its terms of reference include promotion of the Living Wage. In 2012 Preston City Council were accredited as Living Wage Employer by the Living Wage Foundation/Citizens UK. This was announced by Ed Milliband in Birmingham last year in Living wage week. For further information please contact Angela Harrison, Governance Director, a.harrison@preston.gov.uk 7

The NHC would like to hear further from members around their activity on the Living Wage and would like to map out organisations thinking around this including those who have signed up, those who are thinking about it and those who have decided not to take the pledge. NHC would be grateful if your organisation could partake in the survey which can be found here. The Living Wage Foundation recognises and celebrates the leadership shown by Living Wage employers across the UK and believe that work should be the surest way out of poverty. The foundation s work is focussed around three core areas: 1. Accreditation - They offer accreditation to employers that pay the Living Wage, or those committed to an agreed timetable of implementation, by awarding the Living Wage Employer mark. 2. Intelligence They provide advice and support to employers implementing the Living Wage including best practice guides; case studies from leading employers; model procurement frameworks; access to specialist legal and HR advice. 3. Influence They provide a forum for leading employers to publicly back the Living Wage, working with Principal Partners who bring financial and strategic support to the work. If you would like further information on becoming a Living Wage Employer please visit www.livingwage.org.uk For further information on NHC s work around tackling poverty and social exclusion please contact satty.rai@northern-consortium.org.uk 8