Investors sharpen their focus on the real Living Wage in the UK
Leading UK companies are today facing renewed calls from a group of large institutional investors over low wages.
In an effort coordinated by ShareAction, 15 investors with assets totalling over £180 billion including NEST, Strathclyde Pension Fund and Candriam Investors Group are writing to FTSE companies – such as Severn Trent, United Utilities, Vodafone, and certain construction companies – to encourage them to accredit with the Living Wage Foundation.
Accreditation as a Living Wage employer means paying all staff at least £10.55 per hour in London and £9 per hour outside London. These rates are independently calculated as being sufficient to meet the real cost of living. They are higher than the UK Government’s so-called National Living Wage.
In letters to companies’ CEOs, investors state that paying a Living Wage makes strong business sense for the long-term success of a company. Paying a real Living Wage has been proven to bring a range of benefits – including reduced staff turnover, higher retention rates, and improved employee relations.
The responsible investment charity engages with the majority of FTSE 100 companies on the issue of the Living Wage, and is now expanding its scope to the FTSE 350. This round of engagement is starting with mostly construction companies, as the sector has been identified as particularly vulnerable to precarious work and low pay. 63 companies within the FTSE 100 are yet to ensure staff – including directly employed staff and contracted staff who are central to company operations – are paid a real Living Wage.
Investor awareness of workforce issues is rising, along with an increased focus and engagement on social issues. ShareAction, supported by the Joseph Rowntree Foundation and Trust for London, recently published an investor briefing called “Influencing UK Workforce Practices through Responsible Investment.” Within this, the Living Wage was highlighted as a salient issue for investor attention within this.
Mara Lilley, Senior Campaigns Officer at ShareAction, said: “We’re delighted that investors are stepping up for fair pay, because we’ve seen the impact this can have. When we started engaging with target FTSE 100 companies in 2010, only two were accredited. That number now stands at 37. Companies are clearly listening to their shareholders. By engaging with companies on behalf of savers, these investors are showing that it’s entirely possible to focus on good returns as well as the interests of employees who may be struggling despite being in work.”
Diandra Soobiah, Head of Responsible Investment and NEST said: “Paying workers the Living Wage brings clear benefits such as driving up the performance of workers and boosting the business’ reputation, which should make the employer more profitable and successful. As a pension scheme with more than seven million savers we need to achieve the best possible investment returns on their behalf. That’s why we’re calling on the companies we invest in to do the right thing and sign up to the Living Wage.”
Amy Wilson, Engagement, Hermes Investment Management said: “As long-term investors, we’re calling on UK plc to embed social sustainability in their businesses by paying employees and contracted staff the Living Wage. We want to see companies focus on the longevity and productivity of their business operations, and there is considerable evidence that paying the Living Wage helps to achieve these objectives.”
Neville White, Head of SRI Policy and Research at EdenTree Investment Management: “As responsible investors, we regularly engage with companies on the Living Wage as a means of tackling inequality and preventing in-work poverty. Collaborative engagements are key to progress on this front, leveraging the collective voice and expertise of like-minded investors. We find that a company’s stance on the Living Wage is an excellent indicator of its wider approach to corporate social responsibility.”
Jackie Turpin, Head of Finance at Joseph Rowntree Charitable Trust said: “We firmly believe that a workforce which feels valued and respected will outperform one that doesn’t. We welcome collaborative engagement to demonstrate that this belief is widely held and is rooted in many people’s experience.”