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New research reveals Living Wage is good for business

A new study by Middlesex and the University of Liverpool finds companies paying the voluntary Living Wage benefit from a boost to morale, productivity and reputation

Company directors in a meetingNew research by Middlesex University and the University of Liverpool reveals the clear benefits experienced by small businesses who pay the voluntary Living Wage – including fewer employee disputes, an increase in productivity and staff motivation and a reputational advantage over competitors.

The study, Putting the Living Wage to Work, is the first UK-wide research of its kind to examine the motivation behind small to medium enterprises (SMEs) who pay the voluntary Living Wage. It was funded by the Barrow Cadbury Trust and will be launched at an event in Central London.

“Our research shows that small businesses can afford to pay the Living Wage. It can be done and the benefits make economic sense,” Dr Andrea Werner, Senior Lecturer in Business and Management at Middlesex University

The voluntary Living Wage is currently £9.40 for London and £8.25 in the rest of the UK. The researchers collected data from 60 organisations and conducted 23 in-depth interviews to gauge the impact of introducing the Living Wage.

Key findings from the report include:

  • 72% of organisations saw a positive effect on their brand reputation after paying the Living Wage
  • 60% saw a positive effect on manager/employee relations
  • 43% said employee morale and productivity improved
  • 77% said they paid the Living Wage because it was in line with their company values
  • 15% said paying the Living Wage added more than 10% to the wage bill but a substantial proportion (40%) said that it had not done so.

Dr Andrea Werner, Senior Lecturer in Business and Management at Middlesex and co-author of the report, believes the Living Wage is an affordable way for businesses to enhance their employees’ well-being.

“Respondents who took part in our study told us how much they benefited from paying the Living Wage in terms of brand reputation, employee retention and increased staff productivity and motivation. It’s a definite win for these businesses,” she says.

Dr Ming Lim from the University of Liverpool is impressed with the enthusiasm of businesses adopting the voluntary Living wage.

“Businesses clearly take the Living Wage extremely seriously and personally; they have expressed their desire to work with the Living Wage Foundation and other agencies to champion the Living Wage even more strongly as well as to promote its benefits and communications profile,” says Dr Lim.

“This report is excellent news for small businesses and the people that work for them,” Katherine Chapman, Director of the Living Wage Foundation

Katherine Chapman, Director of the Living Wage Foundation, found the results of the study extremely encouraging for the future of the Living Wage.

"It shows yet again that paying the real Living Wage, which goes beyond the statutory minimum, not only ensures that people earn enough to meet their costs of living but brings real business benefits for small employers through improved productivity and staff retention.

“As we lead up to this year’s Living Wage Week which begins on October 31st I hope this will encourage even more small and medium sized employers to join our movement to voluntarily pay the real living wage,” says Katherine.

Find out more about Business and Management courses at Middlesex.

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