Social Europe

politics, economy and employment & labour

  • Themes
    • European digital sphere
    • Recovery and resilience
  • Publications
    • Books
    • Dossiers
    • Occasional Papers
    • Research Essays
    • Brexit Paper Series
  • Podcast
  • Videos
  • Newsletter

What Europe can learn from living-wage campaigns

John Hurley 2nd April 2020

The UK’s Living Wage Campaign is a successful experiment in broad-based social advocacy.

living wage campaign
John Hurley

The coronavirus disease (Covid-19) is having drastic consequences for the world of work. In most European countries workers who are not delivering essential ‘frontline’ services are being asked to stay home. Unfortunately many are out of work, while many of those who are not are minimum-wage and low-pay workers, including those working in retail and food-supply chains. How can we ensure that these workers, so essential to our daily lives, are adequately and fairly paid?

While the United Kingdom may be leaving the European Union, the UK campaign for a ‘living wage’ has lessons in this regard for the remaining member states—notably in the context of the European Commission’s commitment to introduce an EU-wide legal instrument on minimum wages, in line with the fair-wage provisions of the European Pillar of Social Rights. The campaign brings together employers, unions, researchers and civil-society activists of different stripes to make the case for decent pay for employees at the bottom of the pay ladder.

In existence since 2002, the campaign originally sought to draw attention to the plight of those on low pay in London and to the inadequacy of the (then newly introduced) statutory minimum wage in supporting a basic but acceptable standard of living. Eighteen years later, it is institutionally mature, with a developed methodology for revisions and increases. It has widespread public recognition, has convinced nearly 6,000 businesses to become accredited by the UK Living Wage Foundation and has extended its reach beyond the capital.

In November 2019, the London living wage was revised to £10.75 per hour (equivalent to €11.80 currently), which is 31 per cent higher than the statutory minimum wage for those aged 25 and over. The UK living wage outside London is lower but still some 13 per cent higher than the legal minimum. Each living-wage employer pledges to pay at least the living wage to all its employees and to third-party employees working on its premises.

Our job is keeping you informed!


Subscribe to our free newsletter and stay up to date with the latest Social Europe content.


We will never send you spam and you can unsubscribe anytime.

Thank you!

Please check your inbox and click on the link in the confirmation email to complete your newsletter subscription.

.

Important lessons

Living-wage campaigns have six important lessons for minimum-wage policy more generally.

Statutory minimum wages are not designed to ensure a minimum standard of living. Legal wage floors have multiple objectives, including raising the income of employees on low pay, ensuring a level playing field for all employers and ‘ending exploitative low pay and redressing power imbalances between employers and workers at the lower end of the labour market’. Crucially, these goals need to be achieved with little or no negative employment effects. But the minimum wage is not designed to provide beneficiaries with a minimum acceptable standard of living. The raison d’être of living-wage campaigns is to go this one extra step, based on a detailed costing of what it takes to have a socially acceptable standard of living and to derive a wage from that costing. Campaigns covered in a recent Eurofound review of initiatives worldwide estimated the living wage as anywhere between 13 and 82 per cent higher than the relevant national legal hourly minimum wage.

Even relatively high minimum wages may not stem rising in-work poverty. Although the relative value of the UK statutory minimum wage has risen steadily since its introduction (from less than half to nearly 60 per cent of median hourly pay for those aged 25 and over), the share of workers in in-work poverty has also risen over a similar period (from 13 to 18 per cent in 2019). The UK is now at the top table as far as relative generosity of the statutory minimum wage is concerned, alongside a small group of member states with rates set at or near 60 per cent of median hourly pay (France and Portugal). So how can in-work poverty have increased? Part of the explanation is that many core costs, notably housing, are rising faster than wages. Around half of this increase in the UK in-work poverty rate is attributable to the increased cost of housing.

More generally, increasing private provision and low or decreasing public subsidy in areas such as housing, education, childcare and transport contribute to problems of affordability for those on low pay. It is no coincidence that the countries where living-wage campaigns have gained traction—the UK, Ireland, New Zealand, Canada and the United States—are those in which social spending is low by international comparison.

Minimum wages should thus not be seen as a stand-alone policy. Wages alone may not be enough. Especially for principal household earners on low pay, income from work may be supplemented by state transfers (housing benefits, child allowances, in-work benefits and so on)—some means-tested, some universal. It is the combination of these different elements of income that allows many workers and their households to escape poverty. The mix and interaction of policies is crucial.


We need your support


Social Europe is an independent publisher and we believe in freely available content. For this model to be sustainable, however, we depend on the solidarity of our readers. Become a Social Europe member for less than 5 Euro per month and help us produce more articles, podcasts and videos. Thank you very much for your support!

Become a Social Europe Member

National minimum wages are blind to growing regional cost-of-living differentials. There is a single statutory minimum wage regime in the UK but there are two distinct living wages based on where one lives. The London living wage is 15 per cent higher than its rest-of-UK equivalent. This underlines the large difference in regional cost of living, notably between larger, more economically dynamic, metropolitan areas and their hinterlands in the same country. The legal minimum wage is likely to be especially inadequate in high-cost cities. This raises sustainability issues for the individual, households and society. The high living costs of cities make it hard for those on low pay to make ends meet. This may also jeopardise labour supply in many services in the public and private sectors, in health and care as well as in retail, hotels and restaurants.

There are many complementary approaches to boosting earnings. The voluntary Living Wage Campaign in the UK coexists with legal minima as well as with collectively negotiated wages in specific sectors and establishments. There is no a priori reason why such different approaches cannot operate together and reinforce each other in any national setting. In the UK, the minimum wage sets a floor above which unions can negotiate higher rates for their members. Living-wage campaigns provide an evidence-based justification for increasing the legal minimum while also serving increasingly as an alternative higher reference level for many union pay claims, especially in public-service sectors. The increasing share of employment in service sectors with weak collective representation means that rises in the legal (and voluntary) wage floors boost pay for low earners where social dialogue is limited or absent.

The politics of minimum wages are changing. A legal wage floor has always been a popular policy; increasingly, it is becoming a populist one. It was one of the first important pieces of legislation introduced by the UK Labour government after taking power in 1997. Its introduction in Germany was a condition of the social-democratic SPD entering grand coalition with the centre-right CDU in 2013. But the politics of the minimum wage have changed, in some ways remarkably. Nowadays, parties on the right and left of the political spectrum endorse higher minimum wages as a policy goal. Conservative, nationalist governments in Hungary and Poland have both recently announced sharp rises in the statutory minimum wage, as has the left-wing coalition in Spain. In the UK, the current Conservative government has pledged to ‘eliminate low pay’ by raising the minimum wage to 66 per cent of median pay by 2025. This was the same party that opposed the introduction of the minimum wage two decades ago, arguing that it would cost millions of jobs.

Political convergence

Various explanations can be offered for this political convergence on a traditionally partisan public-policy issue. A growing body of research evidence suggests that reasonably set minimum wages lead to limited (if any) negative employment effects, rebutting the orthodox, supply-and-demand-based predictions of classical economics. This may have encouraged parties on the right to appropriate the policy, neutralising it as a source of political advantage to their opponents on the left. Tightening labour markets—before the coronavirus crisis—and higher company profitability, as well as the pressure to be seen to be doing something about growing inequality, have provided a positive context for such moves.

But the idea of a living wage has also been an important spur to minimum-wage activism. At its simplest, the idea that those who work full-time should not want for basics is a compelling one. Living-wage proponents have been successful in underlining that, for this to happen, policy-makers need to pay attention not just to levels of pay but also to the rising cost of living.

When we emerge from the current crisis much of what we took for granted in society will need to be looked at again—including how to ensure a decent standard of living for those contributing through their work to vital goods and services.

John Hurley

John Hurley is a senior research manager in the employment unit at Eurofound, where he has authored or co-authored more than 20 reports. His main research interests are in comparative labour-market analysis, restructuring and the changing world of work.

Home ・ Politics ・ What Europe can learn from living-wage campaigns

Most Popular Posts

schools,Sweden,Swedish,voucher,choice Sweden’s schools: Milton Friedman’s wet dreamLisa Pelling
world order,Russia,China,Europe,United States,US The coming world orderMarc Saxer
south working,remote work ‘South working’: the future of remote workAntonio Aloisi and Luisa Corazza
Russia,Putin,assets,oligarchs Seizing the assets of Russian oligarchsBranko Milanovic
Russians,support,war,Ukraine Why do Russians support the war against Ukraine?Svetlana Erpyleva

Most Recent Posts

transnational list,European constituency,European elections,European public sphere A European constituency for a European public sphereDomènec Ruiz Devesa
hydrogen,gas,LNG,REPowerEU EU hydrogen targets—a neo-colonial resource grabPascoe Sabido and Chloé Mikolajczak
Big Tech,Big Oil,Big Pharma,agribusiness,wealth,capital,Oxfam,report,inequality,companies Control the vampire companiesJayati Ghosh
Labour,Australia,election,climate,Greens,teal Australian Labor’s climate policyAnna Skarbek and Anna Malos
trade,values,Russia,Ukraine,globalisation Peace and trade—a new perspectiveGustav Horn

Other Social Europe Publications

The transatlantic relationship
Women and the coronavirus crisis
RE No. 12: Why No Economic Democracy in Sweden?
US election 2020
Corporate taxation in a globalised era

Eurofound advertisement

Living and working in Europe 2021

The Covid-19 pandemic continued to be a defining force in 2021, and Eurofound continued its work of examining and recording the many and diverse impacts across the EU. Living and working in Europe 2021 provides a snapshot of the changes to employment, work and living conditions in Europe. It also summarises the agency’s findings on issues such as gender equality in employment, wealth inequality and labour shortages. These will have a significant bearing on recovery from the pandemic, resilience in the face of the war in Ukraine and a successful transition to a green and digital future.


AVAILABLE HERE

Foundation for European Progressive Studies Advertisement

EU Care Atlas: a new interactive data map showing how care deficits affect the gender earnings gap in the EU

Browse through the EU Care Atlas, a new interactive data map to help uncover what the statistics are often hiding: how care deficits directly feed into the gender earnings gap.

While attention is often focused on the gender pay gap (13%), the EU Care Atlas brings to light the more worrisome and complex picture of women’s economic inequalities. The pay gap is just one of three main elements that explain the overall earnings gap, which is estimated at 36.7%. The EU Care Atlas illustrates the urgent need to look beyond the pay gap and understand the interplay between the overall earnings gap and care imbalances.


BROWSE THROUGH THE MAP

Hans Böckler Stiftung Advertisement

Towards a new Minimum Wage Policy in Germany and Europe: WSI minimum wage report 2022

The past year has seen a much higher political profile for the issue of minimum wages, not only in Germany, which has seen fresh initiatives to tackle low pay, but also in those many other countries in Europe that have embarked on substantial and sustained increases in statutory minimum wages. One key benchmark in determining what should count as an adequate minimum wage is the threshold of 60 per cent of the median wage, a ratio that has also played a role in the European Commission's proposals for an EU-level policy on minimum wages. This year's WSI Minimum Wage Report highlights the feasibility of achieving minimum wages that meet this criterion, given the political will. And with an increase to 12 euro per hour planned for autumn 2022, Germany might now find itself promoted from laggard to minimum-wage trailblazer.


FREE DOWNLOAD

ETUI advertisement

Bilan social / Social policy in the EU: state of play 2021 and perspectives

The new edition of the Bilan social 2021, co-produced by the European Social Observatory (OSE) and the European Trade Union Institute (ETUI), reveals that while EU social policy-making took a blow in 2020, 2021 was guided by the re-emerging social aspirations of the European Commission and the launch of several important initiatives. Against the background of Covid-19, climate change and the debate on the future of Europe, the French presidency of the Council of the EU and the von der Leyen commission must now be closely scrutinised by EU citizens and social stakeholders.


AVAILABLE HERE

About Social Europe

Our Mission

Article Submission

Membership

Advertisements

Legal Disclosure

Privacy Policy

Copyright

Social Europe ISSN 2628-7641

Social Europe Archives

Search Social Europe

Themes Archive

Politics Archive

Economy Archive

Society Archive

Ecology Archive

Follow us on social media

Follow us on Facebook

Follow us on Twitter

Follow us on LinkedIn

Follow us on YouTube