Government should encourage payment of living wage, say employers

Two-thirds (63.2%) of employers believe that the Government should act to encourage the payment of the living wage, according to research from XpertHR.

In terms of what this should entail, however, the most favoured option would be to “introduce tax incentives for employers who pay the living wage” – thereby removing some of the additional cost for the employer. Others think that the Government should simply back the campaign for employers to pay the living wage (57.3%). Only one-third (32.9%) said that this should go as far as making it mandatory for public-sector employers to pay the living wage.

The living wage is independently calculated as the minimum hourly rate of pay required to meet the basic costs of living. There is no statutory obligation for employers to pay it, but it has gained momentum over the past year as employers have publicly made commitments to pay all their workers the living wage.

The Scottish Government pay policy for 2013/14 – which covers the Scottish Government and its associated departments, agencies and public corporations – requires employers operating under the policy to ensure that staff are paid the Scottish living wage (£7.45 per hour from 1 April 2013).

The XpertHR findings come just as it was announced that the Government had accepted the Low Pay Commission’s recommendation of a 3% increase in the adult rate of the national minimum wage from October 2014. The above-inflation increase will be welcomed by the 45.8% of employers questioned by XpertHR that feel the minimum wage is currently too low.

Although two-fifths (42.7%) of employers feel that the minimum wage should be raised in line with inflation, only a quarter (26%) say that it should be raised to the level of the living wage.

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Commenting on the research, XpertHR pay and benefits editor Sheila Attwood said: “It seems that employers think that the wage floor should lie somewhere between the current levels of the minimum wage and the living wage.

“There is also support for linking minimum wage increases to increases in inflation or earnings, rather than on the recommendations of an independent body.”