Marieanne Fallon: A 'living wage' pays off with greater loyalty and motivation

Midweek View: The turnover among our contractor staff has almost halved, reducing recruitment costs by £75,000 on one contract

It's one of the contradictions of modern Britain that thousands of people who have full-time jobs in successful organisations can still find themselves caught in a poverty trap.

The army of cleaners, caterers, security, administrative staff and others – who behind the scenes keep the operations of business and industry running smoothly – are frequently also the victims of low pay. Most large businesses simply couldn't cope without them, but many have two or more jobs to provide even a basic standard of living for their families.

Latest figures from Save the Children show that 61 per cent of children living in poverty have at least one parent in work.

But a growing body of organisations – across private and public sectors – are saying the problem of low pay has to stop, and have elected to provide all their people a living wage.

This week – in "Living Wage Week" – we have welcomed a fast-growing body of businesses and other organisations who say that they want to become living wage employers.

This means that KPMG and all other accredited employers will pay their workers a new rate of at least £8.55 an hour in London, and £7.45 outside the capital. That's a rise of 25 pence, and significantly above the national minimum wage of £6.19 for workers aged 21 and over.

To date, approaching 100 organisations are accredited living wage employers, and others will join. This is significant progress since the birth of the London campaign in 2001. But the time has surely come for more of our biggest employers to follow suit.

Businesses, of course, will be worried about a rise in their costs if they move to paying the living wage. Rightly so, as they are businesses, not charities, and must be run on profitable lines. We recognise that some organisations may be unable to afford these rates, particularly in difficult economic times. And, of course, different parts of the country have different costs of living.

But I believe that there is a compelling business case as well as a moral one for paying the living wage. It is not only about doing the "right thing". The benefits of higher motivation, greater loyalty and lower churn among staff in receipt of a living wage can actually lead to cost neutrality or even savings for businesses.

For example, since introducing the living wage at KPMG six years ago, the turnover among our contractor staff has almost halved – reducing recruitment costs by £75,000 on one major contract – while our cleaning and catering providers have reduced their training and other overhead costs as employee loyalty has grown.

Research by Queen Mary University in London has shown that more than 80 per cent of employers believe the living wage has enhanced the quality of the work of their staff, while absenteeism has fallen by approximately 25 percent. And that's without the added benefit of knowing that you are paying your staff a decent wage for a decent job done.

The calibre, motivation and loyalty of our contractor staff is vital to KPMG. If these individuals are not motivated, our clients and staff do not receive the level of service they expect. All professional services firms seek to deliver the highest-quality service, and we remain unconvinced we would have the same calibre of staff if we did not pay the living wage.

In many businesses, paying the living wage can not only pay for itself, but also unlock potential among the people and communities living around them.

Whether or not to pay the living wage is an individual decision for each organisation to think about. It's not a legal requirement – that's what the minimum wage is for.

But I believe we are now witnessing the spread of living wage employment from the niche to the mainstream, with some of the UK's biggest companies expected to announce their accreditation over the coming weeks.

This country has just seen the first "living wage Olympics" where every worker was paid at least the living wage.

Now is the time for that momentum to carry through, and for the living wage to become the norm among all forward-thinking organisations.

The writer is a partner and board member at KPMG in the UK

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