The future challenges for employers paying the real Living Wage

The new Living Wage was launched on Monday across the UK, and Strathclyde hosted a special conference where the concept and associated issues were discussed. Here, Michael Kelly, founding chair of the Living Wage Foundation UK, shares some thoughts.

I was delighted to be part of the Scottish Living Wage Expo Conference at Strathclyde on Monday. We heard from a number of people regarding their personal experiences of both paying and receiving the living wage.

It is great to see more than 600 employers in Scotland now paying the Living Wage and it looks set to grow even faster next year. But there are challenges coming down the track and it is worth thinking about them now.

We met for the announcement of the new rate at the Technology and Innovation Centre - and a very apt place it was indeed.

Employers need to continually innovate to survive regardless almost of which sector they are in. The best ones involve their staff as well, and these days they are involving their customers and suppliers in the same conversations.

The cost of the Living Wage increases has generally been absorbed by a mix of lower profits, increased cost of goods sold, and increased productivity.

It is this last area which has been under exploited by some and is a great way to start the conversation. Strathclyde University published their ‘Business Case’ research last year and it is worth a read. It tells of transferable practices which have cut operational costs and improved sales.

In Scotland, the Government has made it a very clear part of its strategy and so any public sector supplier needs to be aware of how they are going to change.

Ultimately it is about what type of an employer you want to be and the solution to the cost issue is a combination of all of the above. As the movement grows the value of the brand can only increase and early adopters will gain the most.

About Michael Kelly

Michael Kelly is Visiting Professor in Accounting and Finance at Strathclyde Business School and was Founding Chair of the Living Wage Foundation UK