Understanding the National Living Wage: A Commitment to Fairness at Class People

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About the Living Wage

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The real Living Wage is the only rate calculated according to what people need to make ends meet. It provides a voluntary benchmark for employers that choose to take a stand by ensuring their staff earn a wage that meets the costs and pressures they face in their everyday lives.

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The UK Living Wage is currently ￡12 per hour. There is a separate London Living Wage rate of ￡13.15 per hour to reflect the higher costs of transport, childcare and housing in the capital. These figures are calculated annually by the Resolution Foundation and overseen by the Living Wage Commission, based on the best available evidence on living standards in London and the UK.

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Adopting the National Living Wage (NLW) during times of financial pressure on employees is important for several reasons, showcasing a commitment to fair employment practices and social responsibility. Here are some key points to consider:

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Financial Stability for Employees:

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The NLW ensures that employees receive a wage that allows them to cover their basic living expenses. This is crucial during times of financial pressure, as it provides a sense of stability and security for individuals and their families.

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Meeting Basic Needs:

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Financial pressures can be exacerbated when employees struggle to meet their fundamental needs. By paying the NLW, employers help ensure that their workers can afford essentials such as housing, food, and healthcare, reducing financial stress and improving overall well-being.

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Employee Morale and Engagement:

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During challenging economic times, employees are likely to appreciate and be more engaged with employers who prioritize their financial well-being. Adopting the NLW demonstrates that the company values its workforce and is actively working to alleviate financial pressures.

Reducing Employee Turnover:

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Financial stress is a significant factor in employee turnover. By adopting the NLW, employers signal their commitment to fair compensation, which can lead to increased employee loyalty. This, in turn, reduces turnover costs associated with recruitment, training, and onboarding.

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Enhancing Corporate Reputation:

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Companies that prioritize fair wages and employee well-being are often viewed more positively by the public. This positive perception can contribute to a strong corporate reputation, attracting customers and investors who appreciate ethical business practices.

Legal Compliance and Risk Mitigation:

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Adhering to the NLW is not only a legal requirement but also a way to mitigate legal and reputational risks. Failing to pay the NLW can lead to legal consequences and damage a company's standing in the business community.

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Social Responsibility:

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During financially challenging times, companies that demonstrate social responsibility by paying the NLW contribute to a more equitable society. This commitment aligns with broader corporate social responsibility (CSR) goals and reflects positively on the company's values.

Economic Stimulus at the Local Level:

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Paying the NLW can have a positive impact on the local economy by increasing consumer spending. When employees have more disposable income, they are likely to spend it in their local communities, contributing to economic growth.

In summary, adopting the National Living Wage during times of financial pressure on employees is not just a legal obligation but also a strategic decision that can lead to improved employee morale, reduced turnover, and a positive impact on the company's reputation and the broader community. It reflects a commitment to ethical employment practices and social responsibility.

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What is the Living Wage Foundation

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The Living Wage Foundation is the organisation at the heart of the movement of businesses, organisations and individuals who campaign for the simple idea that a hard day’s work deserves a fair day’s pay. The Living Wage Foundation receives guidance and advice from the Living Wage Advisory Council. The Foundation is supported by our principal partners: Aviva; IKEA; Joseph Rowntree Foundation; KPMG; Linklaters; Nationwide; Nestle; Resolution Foundation; Oxfam; Trust for London; People’s Health Trust; and Queen Mary University of London.

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What about the Government’s national living wage?

In July 2015 the Chancellor of the Exchequer announced that the UK Government would introduce a compulsory ‘national living wage’. It was introduced in April 2016, originally applying for all workers over the age of 25, is currently ￡10.42 an hour and applies for workers over the age of 23. The rate is different to the Living Wage rates calculated by the Living Wage Foundation. The government rate is based on median earnings while the Living Wage Foundation rates are calculated according to the cost of living in London and the UK.

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