London assembly for North East London — fighting your corner at City Hall

The new hourly rate for the Living Wage was announced yesterday. I believe that the London Living Wage (LLW) should be a statutory obligation across the capital and the UK as a whole.

It was announced that the LLW will rise next year to £8.80 from its current rate of £8.55. There have been fears that introducing higher wages would lead to unemployment. However, a new report out today challenges this.

The report, commissioned by Unison, analyses the economic impact of a nationwide living wage on jobs and growth. It finds that £3.26 billion extra would be generated for the Treasury and this would lead to a £3.15 billion boost to the economy. This would support jobs and “…aggregate job gains in excess of 7,000”.

This roll-out of a statutory Living Wage is even more pressing, given the cost of living in London.

Our research shows that a resident, living in a two-bed home, earning the National Minimum Wage and commuting to work in central London from Hackney, Islington and Waltham Forest has to spend, respectively, an estimated 12.4%, 12.4% and 17.8% of their pay on travel and, respectively, an astonishing 168.9%, 188.1% and 109.8% on rent (i.e. more than a person on the National Minimum Wage actually earns).

These figures have got worse since 2008, which were 4.9%, 4.9% and 7.1% for travel, respectively across the three Boroughs, and 63.7%, 75.3% and 48.0%, respectively, on rent.

The LLW has been successful in ensuring thousands of workers in London receive a fair day’s pay for a fair day’s work. I pay tribute to former leader of Islington Council, Catherine West, for her and her team’s hard work on becoming an accredited Living Wage employer, but this needs to become the norm across London, rather than the exception.

Today’s report by UNISON shows that introducing a statutory living wage could lead to an increase in jobs rather than a reduction. I am delighted that there are now plans to introduce measures to encourage more employers to pay a Living Wage through tax incentives.

The Mayor must do more to encourage employers to pay the London Living Wage and he can start by making the institutions he is responsible for accredited Living Wage employers. At the current rate of progress it will take 450 years for all workers to be paid a living wage in London. Londoners are struggling and the Mayor’s inflation-busting fare increases mean that residents earning the National Minimum Wage and travelling to work are having their modest wages squeezed even more.

The fact that people earning the National Minimum Wage cannot, on average, afford to rent houses in Hackney, Islington and Waltham Forest without assistance is unacceptable. Introducing a statutory living wage will remedy this, and could be phased in to help smaller businesses cope with the increase and give people time to prepare. Poverty pay is unacceptable, and a statutory Living Wage will enable everyone to be able to afford to live in Inner London without having to rely on assistance from their family or from the state through the benefits system.

As today’s report states, this policy would lead to an economic win-win, by boosting demand and economic growth, reducing the extent to which benefits prop up poverty pay and reduce earnings inequality across the capital. The time is now for a proper, statutory Living Wage across London and across the UK.