The government’s national living wage, which has now come into effect, raises the wages of over one million of the UK’s poorest paid workers to £7.20 an hour.
Some businesses argue this basic increase will affect their ability to operate competitively, but Freshwater believes the government should have gone further by adopting the Living Wage Foundation’s recommended rates of at least £8.25 per hour and £9.40 with London weighting.
Freshwater is among more than 800 employers who have adopted the Foundation’s rates as their basic starting salaries recognising they are the least employees should earn.
“The issue of competitiveness is a red herring,” says Steve Howell, Freshwater’s chief executive. “The poorest paid workers are in sectors such as retail, catering and cleaning that serve only the UK market. When all employers in the same market are required by law to pay the same rates, it’s a level playing field – there is no competitiveness issue.
“The trouble with the government’s national living wage is that it is not based on a realistic assessment of the cost of living and it does not apply to young people.
“It also needs to be effectively enforced. The communications and marketing world is blighted by agencies that try to get away with paying interns nothing and junior staff next-to-nothing.
“They are undercutting ethical competitors like Freshwater, but we are prepared to stand our ground not only because it is right but also because we believe it is commercially sensible in the long run to pay a fair starting salary to attract and retain young talent.”
The government’s national living wage applies only to people who are 25 or older, leaving young people – who are already disproportionately bearing the cost of austerity – out in the cold.
The other major difference is that while the Foundation has a higher rate for London, the national living wage offers no such weighting – even though rental prices in the capital are almost double the UK average.
However, even though the Foundation’s living wage should be commended for being much fairer, it still does not lift all its London recipients out of eligibility for means-tested benefits.
A study by the Greater London Authority found that even with £9.40 an hour many people still qualify for tax credits, housing benefit, council tax support and other benefits that are equivalent to an extra £2.60 per hour.
“Fair play to the Living Wage Foundation for pioneering this debate,” said Steve. “What Freshwater would like to see is a level playing field at rates that people can live on with a referee that won’t tolerate any rule breaking.”
‘Why we must value the truth and pay people properly to communicate it’, an article by Freshwater’s chief executive Steve Howell, affirmed our position on fair pay in the communications industry earlier in the year.
Freshwater is an independent communications consultancy with a range of expertise from crisis communications and media training to events and creative media production.