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London: Why The Living Wage Makes Sense
The Wharf
Rob Virtue

November 25, 2010
View the Original Article

It's still seen by campaigners as the day the tide turned.

Last week, business leaders converged on KPMG's new Canada Square headquarters to discuss the latest developments in the Living Wage, where it was announced more than 100 firms pay the going rate of £7.85 to their lowest paid workers.

But it was over seven years ago at the HSBC's annual meeting in Canada Place that the first real stone was laid, according to the group which spearheaded the campaign in London, Citizens UK.

Back then, cleaner Abdul Durrant (pictured) stood up to address the then executive chairman of the bank Sir John Bond.

Mr Durrant had shares bought for him by East End charities and, representing the "invisible night cleaners" of the bank, asked the HSBC boss to review the cleaning contract with its firm OCS to give the staff a "living wage".

"In our struggles our children go to school without adequate lunch," said Mr Durrant. "We are unable to provide necessary books for their education. School outings in particular they'd miss out on.

"In the end, many of our children prefer a life of crime to being a cleaner."

It was in that uncomfortable atmosphere, among hundreds of shareholders at the "World's Local Bank", that the seed was sown and a year later an 11 per cent pay increase to £6.10 an hour, eight days extra holiday and 10 days sick pay was agreed for Mr Durrant and his colleagues.

During the previous 12 months Barclays had already agreed living wage terms. A year after, Morgan Stanley, Lehman Brothers and Citigroup followed suit. Later, KPMG, would also sign up, as would McGraw-Hill.

It's a series of results which have set a benchmark for the rest of the capital and even the country.

Sampson Low, a policy officer at the Unison union, said: "The minimum wage prevents exploitation in the market but does not give a living wage, particularly in London where there is a high cost of living.

"So we've been backing groups like Citizens UK to put pressure on high profile employers to do the right thing by their workforce.

"It's morally right but there's also a business case too - lower staff turnover, low absences, less recruitment costs and it also saves the treasury nationally in tax credits."

Unison represents workers in education centres which have moved over to the Living Wage, including the University of East London which recently signed up.

Sampson said the fact the education sector, as well the financial sector whose low-paid workers are largely supported by the Unite union, were supporting the campaign acts an incentive for others to join.

"It's very helpful that these sectors, renowned for business acumen see the benefits of the living wage," said Sampson. "We now want to spread it to other areas particularly local councils and health trusts."

The Living Wage Campaign has cross party support with Prime Minister David Cameron hailing it "an idea whose time has come".

Labour leader Ed Miliband reiterated his commitment as part of this week's post-baby leadership "relaunch".

There are critics, however.

Back in 2008, research by the London Chamber of Commerce and Industry found 42 per cent of firms said they would consider job cuts if the living wage was enforced.

The LCCI's policy director Dr Helen Hill said it would particularly impact smaller businesses.

"It is easy to agree to pay 35 per cent above the national minimum wage if you are a large global banking group, or if the taxpayer is footing the bill, but this is a huge ask for many firms in the capital, especially in the current economic climate," she said.

That opposition from LCCI has softened over recent months but the group maintains it should not be "too prescriptive", which will discriminate against the firms which cannot afford it.

Overall, however, the largest companies are increasingly finding benefits.

As chief operating officer at KPMG Richard Bennison said at last week's event: "The benefits are in our catering, our security and our cleaning.

"For us, using the living wage has been a real lift in morale in those services that we're getting and the contractors who are a big part of what we are at KPMG."