​Study reveals paying the living wage has long-term benefits for employers

Adopting the living wage leads to increased staff morale, retention and productivity, a new report has found.

The study by the Living Wage Foundation and the University of Strathclyde used evidence from five major accredited living wage employers covering more than 327,000 staff.

It found that applying the wage encourages businesses to re-evaluate their approaches to staffing and payment in the UK, leading to more effective and efficient working patterns in the long term.

It also leads to better skills development among existing staff, results in improving staff performance and job satisfaction as well as long-term reputational benefits for employers.

The research was launched at a business breakfast hosted by management consultancy KPMG and attended by business groups, third sector organisations and deputy first minister John Swinney.

Swinney said the living wage was making a real difference to the people of Scotland and that the Scottish Government was leading by example by paying it to all staff.

He added: “This study gives evidence of the business benefits of paying the living wage. It isn't simply good for individuals, it is also good for companies. It helps to increase staff retention, reduce absenteeism and enhance businesses reputation."

However Mike Kelly, chairman of the Living Wage Foundation and director of living wage at KPMG, said many businesses in Scotland who would like to pay the living wage felt they are unable to do so due to perceived costs.

“While the report accepts initial costs of implementing the living wage can be an issue for companies, it clearly demonstrates the business benefits of becoming a living wage employer and provides working examples of how businesses can mitigate those additional costs,” he said.

Dr Andrea Coulson, senior lecturer of accounting at the University of Strathclyde and primary author of the report, said reducing in-work poverty is a serious challenge for business and there is no doubt that paying a living wage and improving employee working conditions is an important step in the right direction.

“The report highlights detailed case study evidence of how costs of adopting the living wage are being mitigated and value created for employers, their employees and on-site contract staff,” she added.

The living wage currently sits at £7.85 an hour with the National Minimum Wage £6.50 an hour.