The impact of London Living Wage on financial services

The Living Wage Foundation wants a ‘real living wage’, not the ‘government’s ‘national living wage’, but a minimum rate based on what people actually need to live.

Their proposed wage is £9 per hour, or 15% greater than the current minimum wage for people over 25, and 22% greater than minimum wage for people under 25.

Campaign for financial services to pay the living wage

And now a campaign by the City of London Corporation backed by the Living Wage Foundation is taking aim at financial and professional services in London’s financial district to ensure upwards of the £10.55 per hour London-weighted Living Wage is paid by more companies.

There are 273,000 jobs in financial and professional services in the City and 9,490 financial and professional services firms. So far, over 100 City businesses have signed up to pay the London Living Wage and be Living Wage accredited employers.

Currently, one in five people employed in the capital still don’t earn a wage they can live on. For one of the world’s wealthiest cities and a global financial hub, this situation seems anachronistic.

Indeed, there appears to be few if any arguments as to why all employed people should not be compensated fairly. The extra cost to business would be the most anticipated complaint, but there is growing evidence to suggest that this doesn’t stand up as a reason not to pay all staff fairly.

Shifting costs to pay the wages

KPMG Workplace Services, a Living Wage accredited employer in London, introduced the Living Wage for third party contractors.

The increased cost of wages and other benefits were offset by reductions in recruitment costs, increased skills and productivity of staff and changed business practices.

KPMG has noted improvements in bottom-line performance of its third-party contracts, in both financial and non-financial indicators, such as employee engagement and customer satisfaction levels.

The improvement in bottom-line performance, is a vital aspect of the Living Wage.

The non-financial gains, such as staff retention and talent attraction, improved workplace culture and values – all USPs for potential candidates, especially among millennial and younger generations.

Research by the Living Wage Foundation shows that 93% of university students want to work for a Living Wage employer.

Impact on financial industry

It might initially seem an issue that won’t impact people working in skilled and generally well-compensated roles such as, accounting, tax or advisory, financial and professional services.

However, firms paying the Living Wage to employees and third-party contracted employees will help to tackle in-work poverty, which affects 1 in 8 workers in the UK, said Karen Higgins, Head of Sustainability at Grant Thornton UK.

“Business has a responsibility to pay employees fairly, which results in increased loyalty and a lower staff turnover. Paying the real living wage is just the right thing to do – it is good for individuals, business and society.”

How the Living Wage has improved business rates and mental health

Indeed, according to Living Wage Foundation research, 86% of companies paying the Living Wage say it has improved the reputation of their business.

75% say it has increased staff motivation and retention rates; 64% say it has helped differentiate themselves among their competitors; and 58% say it improved relations between managers and staff.

Furthermore, the London Living Wage gives workers a greater chance of fulfilling their potential within a single job.

It also reduces stress and pressure, allowing for time to access education and training in their spare time, instead of working multiple jobs or scratching for overtime, and consequently, the ability to achieve upward mobility.

Meaning people can spend more time with their families, it can support people’s mental health, it means people can have more of a life.

As Grant Thornton’s Karen Higgins said: “Paying the real Living Wage is just the right thing to do.”

Neil Johnson is a freelance business journalist who contributes regularly to trade publications and member organisations, covering employability, recruitment, business trends and industrial analysis.