Recently, Hexham Real Living Wage Group talked to local employers at the town’s annual jobs’ fair. The conversation was about the Real Living Wage, a wage minimum set annually by the Living Wage Foundation; a rate that is always higher than the Minimum Wage and the National Living Wage. Confused? Not surprising. At the time of writing the Minimum Wage is £9.18 for over 21s, and the National Living Wage is £9.50 per hour for over 23-year-olds. Whereas the Real Living wage is £10.90 for over 18s.
Hexham Real Living Wage Group has attended this job fair on a regular basis and despite inflation and austerity and fuel price rises, the number of Real Living Wage employers has increased this year. Is this counterintuitive? Yes and no. As is reported on a daily basis there is a worker and skill shortage in Britain. Brexit, COVID and the war in Ukraine are external forces that have disrupted the workforce but internally: the gig economy, and poor wages have resulted in lots of early retirements and tens of thousands of non-economically active people. The drive to the bottom in wages and the prevalence of zero hours contracts has also resulted in employed workers accessing food banks. West Northumberland Food Bank reports that 20% of its clients are in work.
What does this say about the employment market?
The idea that you go to work to provide for yourself and your family does not hold true for those who visit food banks or who need to claim benefits to top up their inadequate earnings.
Why are wages rising?
The shortage of labour, and an inability to retain workers, has made companies vulnerable. Despite a brutal and exploitative market, businesses cannot function without workers and a shrinking pool affects how the employment market works. The RMT, the nurses and the post office workers all recognise this. Their demands for levelling up wages, in some cases by 17%, demonstrates that a scarce commodity becomes increasingly valuable.
Anecdotally, one care provider in the area that we spoke to at the Jobs’ Fair is offering £11.50 per hour to care workers. When asked why, they said it was because of a chronic shortage of workers and a current shortage of 300 hours per week in care. Agency costs will be far higher to the company than an increase in an hourly rate.
Last year, Hexham Real Living Wage group collected signatures on a petition asking that the care providers in the county were paid a higher rate (at the time the county was paying a lower rate than other North East Local Authorities), but that any uplift should be passed onto the staff with a baseline payment of the Real Living Wage. We succeeded in this but the crucial point about this petition is that it reflected the views of the employers locally who want to pay their staff more.
Perhaps we are witnessing a perfect combination of the stark reality of circumstances and policies failing the market, and the market failing to provide answers to social and political solutions. Whichever it is, this is evidence that the minimum and living wage are not high enough and that a shrinking workforce may lever a rise in wages for the lowest paid. Fingers crossed.
Penny Grennan is a member of The Hexham Real Living Wage Group