The investment case for investing in workers
If you feel you're being paid adequately for the work you're doing, you're more likely to turn up to your job on schedule and with a good attitude. If you're taking home enough pay at the end of the week or month, your financial worries are reduced and domestic concerns are less likely to impact on how you perform at work. Pay people fairly and they're likely to feel happier and more motivated. The case seems so clear, and yet it's an approach that much of the corporate world has dragged its heels to adopt.
Historically, shareholders have been complicit in encouraging a race to the bottom - actively or tacitly enabling the companies they invest in to minimise costs associated with the workforce. In a more positive recent development, a group of institutional investors - including pension funds and companies that manage millions of pounds in assets - has become more vocal on the benefits they see in companies paying their workers the real Living Wage. Since 2011 these investors have thrown their financial weight behind calls led by ShareAction, the responsible investment charity, for the UK's leading companies to accredit with the Living Wage Foundation.
Happily, more than one-third of the UK's leading companies - those listed on the FTSE 100 - are now accredited Living Wage employers. During 2017 alone, the investor group has engaged with 40 companies and ShareAction has raised the issue of paying the real Living Wage at 36 annual general meetings (AGMs). While top business executives routinely receive generous pay packages on the basis of motivation and reward - often, as one shareholder commented at an AGM earlier this year, for seemingly covering just the basics of what it means to succeed in the role - those on the factory or shop floor have rarely benefitted from the same approach.
However, with the surge in investor and corporate recognition of why it pays to be a real Living Wage employer, those companies that still fail to cascade fair pay throughout their business are increasingly looking out of touch. The investors backing the voluntary Living Wage understand the argument that how a company treats its workers is a key indicator of a sustainable business strategy: that it sheds light on a company's approach to the various opportunities and risks that must be managed to build a successful business and sustained profits.
The announcement of ConvaTec's accreditation this month - joining Diageo, Land Securities, Informa and Ashtead Group - brings the total number of investor-supported FTSE accreditations to five this year: these are companies whose leadership has put their words into action when it comes to truly recognising their workers as key to the company's success.
Now, in part thanks to investor support for the real Living Wage, the take-home pay of thousands of workers up and down the country is looking somewhat healthier. If you're interested in encouraging your own pension fund to help to improve the pay of UK workers you can find out more on the ShareAction website.
Clare Richards
Good Work Programme Manager
ShareAction