Living wages in an era of working poverty and global inequality

A new book by Tony Dobbins and Peter Prowse, The Living Wage: Advancing a Global Movement, observes that as wealth inequality skyrockets and trade union power declines in many countries, the living wage movement has become ever more urgent for public policymakers, academics, and – most importantly – those workers whose wages hover close to the breadline. The book is driven by moral concerns about low pay and inequality in an unacceptably unequal world.

A real living wage (RLW) in any part of the world is rarely its minimum wage: it is the minimum income needed to cover living costs and participate more fully in society. Most governments’ minimum wages are still falling short, meaning millions of workers struggle to cover their basic living costs (especially housing, household bills, food, transport).

The book is divided into two parts. The first comprises chapters specifically examining the living wage across UK sectors. The second considers the living wage in international comparative country contexts around the world. The chapter contributors are leading experts in this area. 

In the UK, the Living Wage Foundation has been celebrating living wage week (15^th-17^th November 2021). On 15^th November 2021, the LWF announced new RLW rates of £9.90 for workers outside London, and a London living wage of £11.05. These rates apply to anyone aged 18 and over. Over 9000 employers across the UK are accredited with the LWF. However, it is voluntary for employers to pay a RLW. By comparison, the UK’s statutory National Minimum Wage (confusingly rebranded as a National Living Wage in 2016) for workers over 23 is due to rise from its current level of £8.91 an hour to £9.50 from April 2022 – with lower rates for younger workers. This is based on Low Pay Commission recommendations to Government.

Beyond the UK, the living wage movement is expanding globally. Indeed, a core purpose of the book is to advance understanding of the experiences and effects of living wages on employee working conditions and living standards, worldwide – and hopefully inform public policy.

The concluding chapter identifies a number of themes relating to the living wage and the bigger picture of global inequalities and imbalances in bargaining power over the effort-reward bargain:

• Why minimum wages are not real living wages, because they do not reflect living costs;
• Why real living wages have (re)emerged in the contemporary era of neoliberalism, rising inequality, and declining trade union bargaining power, especially in countries labelled as liberal market economies (LMEs) like the UK, USA;
• Why the living wage is not a prominent concept in some European countries, including the ‘Nordic’ countries, which retain stronger trade unions, collectivism and equality;
• Why living wages are insufficient as a standalone policy measure to address low pay, inequality and wider social problems (e.g. policies are required to provide affordable public housing to remedy housing costs);
• There are potential mutual gains from a real living wage for employers and employees. The business case relates to a range of better HR outcomes and higher productivity, identified by the CIPD, for example;
• Focus on a broader decent work agenda and a ‘new social contract’ are required to better harness human contributions and capabilities for meaningful work;
• Finally, there is increased interest in a Global Living Wage.