ISSUES
: Business and Trade
Chapter 2: Corporate responsibility
36
Share more profit with your workers,
Centre for Social Justice tells big
business
Big businesses taking advantage of benefit system ‘top-ups’.
B
ig businesses should be
encouraged to use their profits
to increase workers’ wages
towards the Living Wage and ease the
burden on the taxpayer, says a major
think tank.
The report by the Centre for Social
Justice (CSJ) says businesses have
benefitted from sacrifices made by
hard-working employees, and with
rising economic prosperity workers
should be able to share in more of
their company’s successes.
The think tank claims some
businesses are taking advantage of
the benefits system by resisting pay
increases in the knowledge that the
state will ‘top up’ the income of the
low-paid using Tax Credits.
The findings are set out inanewreport,
Tackling Low Pay
. The use of Tax
Credits to ‘top up’ low-paid workers’
earnings to ensure a reasonable
standard of living ‘exploded’ under
New Labour, rising by 2,400 per cent
from £1 billion in 1999/2000 to £24
billion in 2008/09.
To incentivise employers to pay a
Living Wage, the report calls on big,
profitable companies to disclose in
an annual report the measures they
are taking to become a Living Wage
employer and to help their employees
progress.
The report also calls for sizeable
increases in the National Minimum
Wage, after it lost a considerable
amount of value during the recession.
With the economy now strong
enough to withstand such a rise, it
recommends sizeable above inflation
increases in the minimum wage
until there is evidence it is harming
employment.
The report also says that Universal
Credit is an important tool in tackling
low pay and helping part-time workers
The London Living Wage currently stands
at £9.15 an hour and the Living Wage
outside of London at £7.85. There are
currently 1,229 Living Wage employers
accredited by the Living Wage Foundation.
The London Living Wage is calculated
by combining 60 per cent of the median
London income and an assessment of
the cost of living in London. Outside of
London, the living Wage level is set by the
Centre for Research in Social Policy at
Loughborough University.
gain more hours of employment.
Commenting on the report, the author
David Skelton, said:
“In a time of growing profitability and
economic success, it is unreasonable
to expect the taxpayer to continue
topping up low pay when big
businesses have the ability to increase
wages.
The
recommendations
outlined in this report, if implemented,
will go a long way to improving the
lives of countless people, without
costing jobs.
“Low pay and poverty are often
associated with a host of other
social problems, including family
breakdown, serious personal debt
and an endless cycle of social and
economic deprivation. These are all
problems that prevent families and
communities from realising their full
potential.”
The report reveals that three-quarters
of workers are shackled by low pay for
life. Only around 25 per cent of low-
paid workers ‘escape’ low pay.
The report also finds that 4.3 million
workers in the UK have skills and
qualifications
exceeding
those
needed for their job, suggesting
that businesses should help their
employees to progress in work.
Former CSJ Director Christian Guy
said, “This report should be used by
an incoming government to inform
the next stage of efforts to make work
pay.”
To help prevent cycles of deprivation,
the report outlines a series of other
recommendations, including:
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Firms with an annual turnover of
more than £100 million should be
expected to state on company
letterheads and other marketing
documents whether or not they
pay the Living Wage.
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Living Wage employers should
be expected, within reason, to
procure all services from other
Living Wage employers.
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The Government should ask
the Low Pay Commission (LPC)
to recommend ways for the
minimum wage to recover its
lost value as quickly as possible.
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The power of the LPC should
be broadened so that it is
