An employee in a warehouse looking at a gadget on his forearm
Stacking up: Ikea is one of thousands of businesses that pay the living wage © Hollie Adams/Bloomberg

The writer is director of the Living Wage Foundation

The link between poverty and health inequalities was established more than 10 years ago by the Marmot Review. The evidence was clear that low incomes are associated with worse outcomes in virtually every aspect of health and wellbeing — including life expectancy.

Whether through low pay or insecure hours, people struggle to afford the basics for good health — like decent food and a warm home — and face the constant stress of working multiple jobs, while worrying about paying their bills. This all takes its toll on mental health and family and community life.

This has been thrown into sharp relief in recent months, with inflation far outstripping wages and hitting those on low incomes hardest. Recent Living Wage Foundation polling of full-time workers earning less than the real living wage — the voluntary wage calculated independently to allow for a basic, but decent, standard of living, as championed by the foundation — revealed shocking levels of hardship.

More than half (56 per cent) of low-paid workers have turned to food banks to get by, 42 per cent are regularly skipping meals, and 69 per cent report that the pay they receive negatively affects both their levels of anxiety and their overall quality of life.

Children who live in poverty also have worse health outcomes. They are more likely to have been born prematurely and underweight, to suffer chronic diseases such as asthma, and to have greater mortality rates in early and later life. Child poverty is on the rise — and 75 per cent of children who are growing up in poverty have at least one working parent.

As a society, this is not something we should accept, and it was one of the key drivers behind the campaign for employers to pay a living wage, which began in east London more than 20 years ago. There are now nearly 12,000 accredited living wage employers across the UK, including more than half of FTSE 100 companies, as well as household names such as Nationwide, Ikea and Everton Football Club, plus thousands of small businesses.

By guaranteeing a wage that covers the cost of living, including to contractors such as cleaners and security guards, they are providing crucial security and stability for people most at risk of being trapped in working poverty.

Together, living wage employers have put £2bn back into the pockets of workers who need it most since the movement began. And a growing number of businesses are signing up to provide living hours — minimum guaranteed hours (16 hours a week, unless the worker requests otherwise) and at least four weeks’ notice of shifts.

The business case for better pay and secure hours is compelling: 90 per cent of living wage employers report benefits such as improved recruitment, retention, employee relations, and reputational enhancement. These can be directly linked to employee health and wellbeing — which is, rightly, high on the agenda of many organisations.

Existing levels of ill health are already costly for businesses. The UK economy lost an estimated 149.3mn working days last year because of sickness, with research by the Mental Health Foundation and the London School of Economics suggesting that mental health problems cost at least £118bn over the same period through absence from work and lower productivity.

But employers can also quantify the benefits of the living wage. Chris Smallwood, managing director of living wage-accredited Anchor Removals, says the number of working days his business lost to staff off sick fell from 131 to just 23 within a year of living wage accreditation, dropping again to 11 in the year before the pandemic. Attributing that change to the positive impact of higher wages on the health and wellbeing of his staff, Smallwood estimates living wage accreditation has saved his company £18,000 a year.

And it is not just individual businesses that stand to benefit. New research published by the Living Wage Foundation and the Smith Institute has found that lifting just a quarter of low-paid workers on to the living wage could boost the UK economy by £1.7bn — in part because of the increased productivity associated with health and wellbeing that decent wages promote.

Financial stability and pay are not simply about pounds and pence — they have a huge impact on the mental and physical health of workers, their life chances, and those of their children. Decent pay underpins health and wellbeing in the workplace and is increasingly recognised as a key factor in the social sustainability of businesses — both internally and externally.

Times are tough for all of us. But, as living costs rise and millions more households are predicted to face poverty and deteriorating health, taking the step to become a living wage employer has never been more important.

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