Rising cost of living puts the spotlight on wages

Cost of living rising faster than pension payments

The cost of living is expected to continue to rise - Credit: PA

The official announcement last week that prices are growing at the fastest rate in 10 years won’t come as a surprise to many.

Fuel, energy, food – all up. We are facing a looming cost of living crisis for millions of people unless household incomes increase to cover the rise in prices.

This is going to make the Living Wage Foundation’s work to campaign for higher wages even more important.

Every year in November, the Living Wage Foundation calculates how much someone needs to earn to have a decent standard of living. Last week the new rate was unveiled to be £9.90 an hour.

This is still substantially higher than the Government’s “National Living Wage” which is really just a rebadged Minimum Wage.

There now appears to be a growing realisation from some employers – especially in traditionally low-paying sectors like hospitality – that the race to the bottom with wages and working conditions can’t continue.

This isn’t just because they are finding it hard to recruit and retain staff. You cannot expect your workers to give of their best at work if they are worrying about how they are going to pay the rent or keep their house warm or put food on the table for their kids.

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I’m really pleased that Ipswich Borough Council has been a Living Wage Accredited employer for seven years – meaning that all our staff and all contractors providing direct services to the council are paid at least the Living Wage.

This is sadly not as common as it should be in local government. Ipswich is the only accredited Living Wage district council in Suffolk, and Norwich is the only one in Norfolk. Ipswich and Norwich are also the only Labour-controlled councils in these two counties. This is probably not a coincidence.

Councils need to be better on this. Nearly all pay their directly employed staff the Living Wage but fail on ensuring that suppliers of their outsourced services do too. It’s important that they start to look at this. Their outsourced staff are just as important to the delivery of vital services as their directly employed workers.

We have only to look at the recruitment problems in social care to see where a race to bottom on wages ends up.

When Ipswich wanted to gain Living Wage accreditation seven years ago the only group of outsourced workers we needed to raise the pay of was our cleaners. Since then, we have taken them into the employment of our wholly-owned services company Ipserve – also a Living Wage employer. We have improved our cleaners’ terms and conditions and given them access to a decent pension.

At the time we were told that this would scupper Ipserve’s chances of winning cleaning contracts because we couldn’t compete on cost.

In fact, since Covid, cleaning – and the quality of cleaning – has become much more important in keeping workplaces safe. And a company like Ipserve with a well-paid, well-trained, well-managed workforce that doesn’t skimp on costs and cut corners has suddenly become a lot more attractive.

This is just one small demonstration of how the Living Wage is good for businesses as well as workers.

It is also good for the economy in general. There are currently 15,500 people being paid less than the Living Wage in Ipswich. If just 10% of them had their pay increased to the Living Wage, it would add £1.2million to the local economy.

- David Ellesmere is the Labour leader of Ipswich Borough Council.