· Features

Hot topic: Mandatory living wage

In the first all-Tory budget since 1996, chancellor George Osborne declared that "Britain deserves a pay rise". However, with the UK's productivity lagging behind other developed nations can we really afford to raise wages?

It’s interesting that although there are plenty of businesses who will proudly proclaim their commitment to being a living wage employer, those that are not committed either remain silent, or hide behind the screen of an employers’ federation, which generally makes vague statements about how any increases to the national minimum wage will damage job creation.

The simple fact of the matter is that even chancellor George Osborne’s new compulsory national living wage doesn’t go far enough in addressing low pay. The announcement in July’s budget of a national living wage of £7.20 an hour equates to just over £13,000 per annum.

Of course there are those lucky souls who are paid the London living wage, which equates to approximately £16,500. But it’s important to note that, according to research by the Joseph Rowntree Foundation, single people must now earn at least £17,102 to achieve a minimum standard of living. It’s true that Osborne’s recognition that Britain deserves a pay rise is a step in the right direction, but there is a long journey ahead of us.

Within ActionAid we are committed to removing people from poverty cycles, but as a predominantly donor-funded organisation we must always be prudent with our finances. But our donors don’t expect us to exploit our staff by paying unacceptably low wages.

Within most private sector organisations there’s some sort of obligation to satisfy shareholders and other investors, but in an age of increasing corporate social responsibility and public awareness of pay and reward there’s a crescendo of voices demanding pay restraint at CEO and board level, and fairness in remuneration at the opposite end of the spectrum.

Ultimately it boils down to this: can an organisation refuse to pay a living wage to employees without fatally damaging its reputation and brand?

Graham Salisbury is head of human resources at ActionAid

Check back tomorrow for part two of this Hot Topic