Member Article

The Living Wage, Good or Bad for Business?

Since the introduction of the new government living wage in April this year, I have read many opposing views on the positive or negative impact of the increase in labour costs. In July, we heard the latest GDP growth statistics from the ONS for the UK in the previous 12 weeks of 0.6%. A few weeks after that we read that unemployment was at its lowest level since the crash of 2008. Neither of these two statistics suggests that the April change has started to negatively bite.

We started Calbee in the UK in late 2014, with a vision for taking a new and refreshing approach to the benefits package for our new colleagues. One of the fundamental choices we made was to pay all our colleagues a fair wage for their work. So, for our important factory operative roles, what was considered a fair wage? We decided to pay £1 more per hour than the Government national minimum wage, which was a significant commitment for a start-up business like ours.

In April, the Government increased the threshold, so we responded and continued with our values-based approach by opting to increase our own hourly rate by a further £1 per hour. We also deepened our commitment by becoming an Accredited Living Wage Employer and joined forces with The Living Wage Foundation.

Despite my own beliefs and those of my colleagues, the question that I increasingly come up against when I ask others if they are in support of the Living Wage is can all businesses afford it?

I recognise the immediate challenge that any business, large or small, has in incurring the immediate increase in labour costs. After all, your business model is built around it. It will be interesting to read the results from many companies in 2017 when they publish what impact the increased labour costs have had on their bottom line. Perhaps this will prompt business leaders to look at the issue in a different way.

Ask yourself how much more productive your workforce would be if you paid them more? Would they be more loyal? Would they be more productive? Would they be happier and therefore more motivated? If the answers to these questions are yes, then why not pay more?

So, is it fair to say a more motivated, productive and efficient workforce equals a more profitable business? Few might argue not, but I would argue yes! But I would also take this opportunity to point out that businesses need to find their USP, something that they can use to add value to their product or service, which in turn means that customers will be willing to pay a little extra.

Ultimately, a workforce that commits and rewards your efforts to pay them fairly with loyalty and a product that customers want to purchase is a formula to success. We all need to work to get the balance right.

This was posted in Bdaily's Members' News section by Richard Robinson .