WHEN George Osborne announced a new National Living Wage with immediate effect in his 2016 annual budget confusion reigned.
Greater Manchester currently has 100 businesses accredited by the Living Wage Foundation – that equates to 46 per cent of businesses in the North West who are accredited under the umbrella of the Living Wage – and the city is pioneering the somewhat idealistic national scheme.
It is important to dispel the myth that Osborne and the Foundation are discussing the same level of wage.
While the Chancellor of the Exchequer has introduced a new minimum wage, essentially, for over-25s, the Foundation is promoting a wage that gives workers more money to spend on amenities and ultimately to live a more comfortable life.
Christian Spence [right], Head of Policy and Research at the Greater Manchester Chamber of Commerce, sat down with Quays News to talk affordability: is the Living Wage too idealistic in the current economic climate?
“All businesses? I don’t think so in the current economic climate. There are some sectors where it will be much more difficult than others,” he proclaimed.
“Social Care is a sector caught between a rock and a hard place right now. [George] Osborne’s new wage, for example, they are finding that hard to meet as it is.
“If they were operating in a normal economic market you could say they should afford it but it’s pretty clear that right now they simply could not meet the Living Wage – they just don’t know where the additional funds will come from to fund it.”
The Chamber of Commerce is an accredited Living Wage employer in Manchester and, whilst an advocate, Spence was quick to provide the antithetical reasoning for those who say wage hikes are unsustainable – particularly in the short term.
You can’t increase costs and have no impact. For some companies that will be lower profits. For some it’s increased prices and for others it’s lower employee hours and a cutback on perks.”
The spotlight and media attention is notoriously saturated on clamouring big companies such as Manchester United, Manchester City, Starbucks, to name just three, to pay their staff the Living Wage but the bite is often tougher for smaller firms.
Bradley’s Bakery, an award winning food business based in Hurst Cross, Ashton-under-Lyne, is one of the 100 accredited GM employers.
Gillian Bradley is co-owner of the business with her partner Mark and she admitted that having spoken to fellow business owners, not all could afford to elevate wages across the board to the desired target of £8.25.
A building that maximises every last square inch – the interview took place in an overcrowded storeroom upstairs – Bradley spoke openly about how her business has always been well above the government minimum wage.
The breadth of responses on the affordability debate varied immeasurably based on the size and location of the business.
Tash Khan, managing director of Ecomnova, a website company with offices in Manchester and London, touched on the sectorial issue Manchester and may other cities face, a point Spence also eluded too in his extensive interview at the commerce.
Khan explained: “Some businesses, particularly those in the more manual sectors will find it difficult as economic conditions are tough and margins are slim.
They may not be able to pass the increased costs on to customers as price increases which could lead to customers choosing a substitute provider or to do without altogether which ultimately results in a reduction in sales and therefore, income.”
What Spence was quick to highlight during the discussion was that the public sector is slowing down the process of a universal Living Wage across the region.
Local government needs some fiscal breathing room in order for them to best prepare for such a rise in the mandated level of pay.
If thousands are already well above minimum – and within touching distance of accreditation – it is rather puzzling that there remains just 100 accredited GM firms.
With 2,502 employers at the time of writing, that number could rocket immeasurably if the accreditation process was pushed to employers.
— Living Wage Foundation (@LivingWageUK) April 22, 2016
Spence concluded: “Are we moving in the right direction? Undoubtedly. Fast enough? I’m not sure. Labour market dynamics are very difficult to simplify and yes unemployment is down but it’s far more complex than that.
“We are lagging behind in the number of accredited Living Wage employers. We have around 60-70,000 companies who could accredit at no cost and we need to aim for that to happen. Manchester City Council’s strategy by 2025 is to become a Living Wage City.”
Osborne may have set a new minimum benchmark but Greater Manchester is already plotting to go one step further…
By Nathan Salt