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Read the latest business news, blogs and thought leadership articles from our members, as well as updates on the Edinburgh Chamber of Commerce's work in the city.

News & Blog

Living Wage Vital To Tackle Poverty

Posted: 23rd November 2015

One of the big challenges facing us in Edinburgh is poverty. Sounds bizarre, doesn’t it, that a city as successful and as affluent as ours should still be talking about poverty in the 21st century.

Yet the startling fact remains that 1 in 5 of households in Edinburgh are living in poverty. That is a statistic that none of us can relax around. Even more worryingly, 46% of the households in poverty in Scotland have at least one parent who is working. In some communities that figure rises to 1 in 3.

So if we are to be One City – with the benefits and pleasures of living and working in this wonderful city truly open to all of its citizens – then we need to tackle this difficult issue. And we can tackle it through One City and through our work to encourage Responsible Business.

Poverty cannot be acceptable, at all. Working poverty would be, to most people, a contradiction that should not be tolerated.

That is why one of the key planks of our One City work must be to persuade our business community of the benefits of the Living Wage, set by the Living Wage Foundation. What could be more responsible in the way a business goes about its own daily business. It’s a discussion that is already taking place in boardrooms across the country, with many major businesses already Living Wage adopters.

Not surprisingly, the businesses with fewer resources – and in particular many Small and Medium-sized Enterprises (SMEs)  – are less inclined to adopt the Living Wage, concerned understandably about increasing costs in highly competitive marketplaces.

So it is up to us to make the argument – and there is a really positive case to put. In July of this year KPMG research into the Living Wage was published, and it made heartening reading.

KPMG concluded that raising the Minimum Wage to the Living Wage would take just 1.3% of the national wage bill, lifting six million people out of poverty. Early adopters report clear benefit to their businesses.

Early adopters of the Living Wage have reported significant benefits in a project conducted by the University of Strathclyde and the Living Wage Foundation and supported by Barclays. These include:

  • Reducing staff turnover and recruitment costs
  • Improving productivity
  • Reduced absenteeism
  • Improved staff morale
  • Reputational benefits

But not only is the Living Wage good for workers, and good for many employers, the work carried out by KPMG also showed it would be good for the taxpayer.

KPMG calculated that the average gain to the public finances across the different scenarios of full adoption of the Living Wage and how that might be paid for is just over £4 ½bn of additional revenue from taxes and reduced benefit payments. However, with universal adoption the government would face an extra £3bn of direct wage costs plus higher procurement costs, leaving a net benefit of just over £1½ bn once these are factored in.

So there is a case, a strong one, to be made. And make it we shall over the coming weeks and months. A lot of children, our city’s children, depend on us.

Business Comment

Business Comment is the Edinburgh Chamber of Commerce’s bi-monthly magazine. It provides insight on Edinburgh’s vibrant business community, with features on the city’s key sectors, interviews with leading figures and news on new business developments in the capital.
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