Updates from the Living Wage Foundation

Living Wage Employers Bridge the Gap

January is upon us and across the nation we are taking up the task of tightening our belts, in more ways than one.

Two reports were published over the Christmas period by the Resolution Foundation, one of our Principal Partners. The reports highlight the difficulties facing low and middle income families. Inflation is currently running at 5% but the average worker can not expect a similar rise in wages, so families will soon feel the pinch. The report Priced Out found that the cost of the Minimum Income Standard average basket of goods and services has risen in the past ten years, by 43%, outstripping the CPI (which the government plans to use for future benefit and tax credit calculations) basket which has risen by 23%. In real terms the spending power of the average citizen has been falling dramatically for some time and will continue to do so as the price of basic global commodities increases and government calculations move to CPI.

Resolution Foundation also reported that the planned increase in personal tax allowance in 2012 which could have helped lower income families will be effectively cancelled out by a series of cuts to tax credits totalling £2.5 billion in 2012/13. Meaning lower and middle income families will make few gains overall, if any.

A founding principle of the Living Wage concept is to make  work pay. Lower income workers in full time employment should not be reliant on government subsidies to make ends meet. They should have the dignity of being paid well enough to provide for their families. The government is now reducing these subsidies, cutting the tax credits which have allowed some employers to keeping wages artificially low. Forward thinking employers  who are bridging this emerging gap by paying a Living Wage, are rewarded with improved morale, lower turn over of staff, reduced absenteeism, increased productivity and improved customer service. Just the sort of things a business needs to give it an edge in tough economic times. 

10th January 2012, 13:22
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