Partner Article

How the Living Wage will impact SME's

Yesterday’s Living Wage increase should be welcomed by businesses and employees alike.

The minimum wage has failed to keep pace with inflation, meaning that the lowest paid in our society have suffered swingeing pay cuts over consecutive years. This is simply not fair – but it is also bad for the economy.

The Prime Minister claims that the economy has “turned a corner”, but a recent survey found that just 14 per cent of small business owners believe the recovery is in full swing. Those business owners are right – but we can give the economy the kick-start it needs by restoring demand. Giving fair pay settlements to the lowest paid is one of the most effective ways of doing this.

The Living Wage is also psychologically vital. How can we expect to sustain morale in the workplace unless we are paying employees enough to cover their costs of living? People want to work, but minimum wage employment is simply unaffordable for many.

In addition, by raising pay across the board, we can help to take the strain off the state. Taxpayers are currently bearing the cost of low wages, which are subsidised by the state through tax credits. Business must bear its share of the responsibility here, and begin to take up the slack.

We welcome Ed Miliband’s proposal to offer tax rebates to businesses that decide to pay the Living Wage. This is a sensible means by which we can ensure that both businesses and employees get a fair deal.

There are five million people in the UK earning less than the Living Wage, and so far just 45,000 have benefited from it. It is time for both the coalition and the opposition to consider how we can pay these workers properly – for the sake of fairness, and for the sake of the economy.

This was posted in Bdaily's Members' News section by Jason Stockwood .