IED Member Blog: Creating a Living Wage Place: a pilot and vision
National Minimum Wage, National Living Wage, Real Living Wage. With employer confusion, particularly among SMEs, still prevalent as to what such terms mean, introducing a new category – the Living Wage Place – may seem challenging and counter-intuitive. So why try and define a Living Wage Place, and what does it mean?
In 2015, the Fife Fairness Commission published its finding and recommendations, Fairness Matters, setting out an ambition to make Fife, Scotland’s third largest local authority area, a Living Wage region. Keen to develop a pilot approach for this uncharted territory, it was agreed that this would start with one place – Glenrothes.
A new town, celebrating its 70th anniversary in 2018, Glenrothes maintains a high proportion of manufacturing jobs, many at the higher skills levels, together with retail, hospitality, care and public sector employment. In many ways, then, it provides a microcosm and ideal testbed for the Scottish economy.
With a relatively low proportion of accredited Living Wage businesses across Scotland, understanding what the barriers to accreditation are became the priority first step. The results were mixed. Some businesses did not consider accreditation a priority, some were not seeing the value, some were not aware. In Fife, however, the number of businesses gaining accreditation has been steadily growing with all types of organisation – SMEs, large firms, public and third sector – now signing in up higher numbers.
But what is the motivation for participation? With no imminent change in the law at a UK or national level, which often acts as the key driver of change (even the threat of such), three key drivers will come into play.
Firstly, support to roll out an initiative. We understand that a key barrier for smaller businesses will be the headroom and the resource to engage. A pilot project gives us the opportunity to take these challenges away and work intensively with small businesses to allow them to get accreditation for the first time.
Secondly, peer pressure. Across the UK, colleagues report that the most effective intervention to encourage businesses to participate is the testimony of other businesses who can demonstrate success. While research abounds as to the key benefits of becoming a Living Wage employer, such as a better motivated workforce, staff retention, reduced absence, and increased productivity, the word of a trusted network of businesses holds serious sway in influencing behaviour.
Thirdly, by introducing a place-based approach, businesses can understand their place within a wider community. We will be looking at working both sectors and the geographies as we develop our model. Who would want to be the last business not to have signed up in a community?
But these key pull factors are not enough on their own. In order to successfully deliver this agenda, organisations and individuals with buying power need to step into the breach. My vision for a Living Wage Place is one where consumers, be that businesses through their procurement process or individuals looking for goods and services, start to make active choices on who they purchase from based on whether businesses in their community pay the Living Wage or not. After all, although price may be the biggest influence, knowing that money stays within your community and helps to alleviate issues will be a key driver for many.
For business purchases, this presents a new series of challenges around how tenders can include Living Wage clauses. Although a path well-trodden by major public capital projects, both public and private sector bodies still struggle with demonstrating the validity of a Living Wage clause or wider community benefit clause in their tenders – particularly on how to score these and its legal basis. The most effective way of dealing with this culture change. Procurement teams and buyers need to be in a position to say ‘this is what we value as an organisation and this is the change that we seek to make’.
But all of these need to work together. By supporting businesses to gain accreditation both as a Living Wage employer and a place-based champion of the Living Wage, and by exerting the levers of influence such as contracts, I believe that Living Wage Places represent the future of a dynamic and inclusive approach to economic development.
The concept is easy, the implementation will be challenging. I am encouraged by the enthusiasm of businesses of across the spectrum – multinationals, SMEs, third sector, public sector – in engaging with this new approach. I look forward to celebrating our accreditation as a Living Wage Place very soon.
Gordon Mole is a Board Member of the Institute of Economic Development and Senior Manager, Business and Employability, at Fife Council