What price a living wage? Understanding the impact of a living wage on firm-level wage bills

Published Thu 10 May 2012
Co-published by IPPR and the Resolution Foundation, this short report analyses the likely impact of introducing the living wage as a new wage floor for a range of FTSE-listed businesses across a range of industry sectors.

The report concludes that for many, especially in banking, IT and construction, the average upfront wage costs are affordable, representing less than a 1 per cent increase. In other industries, such as retail and hospitality, where the proportion of lower-paid jobs is higher, the upfront costs would be higher, at between 4.7 and 6.2 per cent. So for these firms the report recommends a phased introduction, starting with a move to pay 90 per cent of the living wage.

The living wage is a voluntary measure designed to pay the lowest-paid workers enough to enable a decent standard of living, hand-in-hand with full take-up of available benefits and allowances. There are separate rates for London (£8.30 per hour) and elsewhere (£7.20).

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