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Employers urged to improve low-income employment

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A BITC report recommends six courses of action for employers to help tackle in-work poverty

Employers should set a strategy for improving low-income employment that goes beyond pay alone, according to an inquiry by Business in the Community (BITC).

Beyond Pay: An Inquiry into Improving Low-Income Employment reported that six million jobs are paid less than the living wage in the UK, and that the child poverty rate in working families rose to 21% for 2013-14.

The living wage referenced in the report is distinct from the national living wage as laid out in the summer Budget. The national living wage – due to come into force in April 2016 – will ensure everyone aged 25 and over receives at least £7.20 per hour, with the target £9 an hour by 2020. However, the living wage as laid out by the Living Wage Foundation is a voluntary rate calculated using the average cost of living in the UK. It is currently £9.15 per hour in London and £7.85 outside London.

Regarding her organisation's findings in this area, Louise Woodruff, policy and research programme manager at the Joseph Rowntree Foundation, said: “When asked what workers would most like to change about their jobs they invariably focused on better, fairer pay,” she said. “Employees welcomed the living wage as a very important benefit, even if they did not receive it.

“In the focus groups, initiatives that could mean greater security outside work such as pay (including being paid for all their working time), sick pay, and help with childcare were considered more helpful than job-focused ones. Employers need to consider the realities of life for low-paid workers and the views of their employees when taking steps to improve low-income employment.”

However, there are ways that organisations can support their staff other than pay. The BITC report recommends six courses of action for employers to help them tackle poverty:

  • Pay and security – direct and thorough procurement; contract types and lengths, as well as pay
  • Line management – facilitating access to support and opportunities
  • Communication – increasing take-up of support and opportunities
  • Skills and progression – training and skills provision to perform and develop in role
  • Job design – effective structure and content of roles and responsibilities
  • Cost of living support – help with housing, childcare, transport, debt and so on through employee benefits and advice

BITC’s chief executive Stephen Howard said the introduction of the national living wage “has put discussions on pay firmly on the boardroom agenda for companies with low-paid staff".

“Pay is very important but it’s not the only solution to a growing social problem,” he said. “Our inquiry shows that businesses should take action beyond pay alone to improve low-income employment. Tackling working poverty has tangible business benefits, including increased productivity and improved staff engagement and retention.”

The report coincides with Living Wage Week, which is held annually in the first week of November.