For people in lower paying jobs, avoiding employment poverty can be a constant struggle.
Wages may now be just starting to rise after ongoing stagnation, but when you consider that the cost of living has been rising sharply over the past decade, any potential gains can be quickly wiped out should the cost of heating a home or feeding a family suddenly rise.
This is where the national living wage is helping make a difference – especially for those people in lower-paying roles.
THE NATIONAL LIVING WAGE: A QUICK OVERVIEW
The National Living Wage is a legally binding hourly rate for any worker aged 25 or over. It’s reviewed every year (like the National Minimum Wage) and is currently set at £8.21 per hour.
The aim of the Living Wage is to reduce the chances of people on lower incomes falling into employment poverty. This is where people are in work and earning a regular wage but are still unable to make ends meet or have difficulty ensuring they can fuel their homes or put food on the table.
Whilst the National Living Wage is without doubt a massive plus to low-paid workers and has been legally-binding since 2016, it can seem like a long way off for those under 25 or just starting out in the world of work – those in apprenticeships for example. Plus, whilst it is reviewed every year, the cost of living is showing no signs of getting any cheaper – for anyone.
This is where the Real Living Wage comes into play.
THE REAL LIVING WAGE
Calculated by the Living Wage Foundation, it argues the government's National Living Wage is not high enough to meet workers' needs and are actively encouraging employers to adopt its more generous, independently calculated rate.
The Foundation states that for people on lower wages to have a better quality of life, a wage of £9 per hour should be made available to everyone over 25. They also believe in areas such as London - where the cost of living is significantly higher than the rest of the UK – it should be set at £10.55 as a minimum.
However, unlike the-now obligatory Living Wage, the Real Living Wage is purely voluntary.
Employers are under no obligation to offer it to their staff and it may be the case that it’s un-affordable for smaller businesses or SMEs. After all, bigger wages – regardless of best intentions – will add financial overheads which simply might not be sustainable.
So, if you’re already paying your staff over and above the Real Living Wage, you’re doing something to help the staff on lower wages live a better quality of life. Not only that, you’re also considering their financial wellbeing, too. You can sit back and take in the kudos, right? Well, no, not yet…
THE REALITIES OF A REAL LIVING WAGE
The thing is, that even offering just a ‘Real’ living wage is really only solving half a problem. In fact, even going beyond the recommended real living wage might not be enough for employees to stay out of debt or allow a decent quality of life.
And this isn’t an issue confined to areas of the country where the cost of living is higher than average.
UK towns and cities have some of the highest costs of living compared to the rest of Europe. Even smaller cities – like Bristol or Coventry for instance – can be expensive just to cover the basics for living.
For example, if you live in Nottingham, the average monthly costs of a single person are estimated to be just under £600 – and that’s not including rent or possible mortgage payments.
For a family of four, this cost (excluding rent or mortgages) rises to around £2,000.
These stats show that even though an employee may be working full time and earning above or around the real living wage, they may not have much left at the end of each month to really have any kind of life or save for those big lifestyle purchases; like a car, holiday or house.
MORE MONEY ISN'T NECESSARILY THE ANSWER
Of course, you’re probably thinking at this point that employers can’t simply start giving pay rises left, right and centre so all their staff can go on expensive holidays, buy a house or drive nice cars. But that’s not the point.
Putting in the graft only to see the fruits of that hard work quickly swallowed up by essentials like utility bills and groceries can be hugely demoralising and affect the wellbeing of your staff, too.
Employees who are earning lower wages also aren’t working any less or being less productive than those above them. But a larger wage packet or pay rise isn’t necessarily the answer, or sustainable, either. So, what can be done to get out of this catch-22 situation help those staff on lower wages thrive instead of just survive?
SUPPORT THAT GOES BEYOND THE BANK ACCOUNT
Supporting your staff with in-work benefits can be the key to helping them do more with their wages without breaking the bank to do so. They’re also often-overlooked when organisations consider how best to motivate, encourage and retain employees.
Money worries can be a real barrier for staff being fully-engaged in their roles. If left unchecked, they can also lead to more serious problems; including poor mental health.
Helping ease their money worries or help with their money management can take a huge weight off their shoulders and allow them to concentrate on the stuff that really matters to them - their career, lifestyle and wellbeing.
By providing access to employee benefits, you’re also helping staff take care of the stuff they really value; from employee discounts at high-street retailers or earning cashback on everyday purchases, to the big stuff – like helping the save on commuting with a cycle-to-work programme or helping with access to a new car through a salary sacrifice scheme.
These are the things that really build tangible engagement with employees and shows that their wellbeing is an important part of your company’s culture.
Not only that, they’ll be both happy and engaged in their roles – all without the need to just resorting to a higher salary or needing to replace the staff who choose to leave for that extra few quid an hour.
Think about it: if an employee is being supported by their employer, is engaged in their role and can access stuff to improve their quality of life, they’re more likely to stick with you for longer and be more aligned with your own company’s goals, vision and values.
financial wellbeing is just the start of a healthy company culture...
Offering staff benefits that improve the quality of life for your employees is just the tip of the iceberg when it comes to creating a positive company culture. The health and wellbeing of employees is now a huge factor in the success of organisations - Get the full lowdown in our free online guide - just hit the link below to check it out!