Opinion: Increasing the London living wage will not do the trick
It is no secret that London is one of the most beautiful cities in the world; but it is also the most expensive. Supported by the strong pound and continually rising rents, London has beaten the former most expensive city, Hong Kong, this year. It is, according to estate agent Savills’ 12 cities report, well ahead of metropolises such as Berlin, Paris or New York. Meanwhile, Londoners are struggling more and more to be able to pay rents and other living costs; many even move away because they cannot afford this city anymore. And raising the living wage alone will not do the trick.
On Monday, Boris Johnson announced that the London living wage is to rise by 35p from £8.80 to £9.15 per hour in the coming year. At first sight, this seems like a fair and kind thing to do. Of course, it is not an awful lot, but it at least exceeds the average national rise in wages by 20p. In truth, however, it is doubtful it will have much of an effect on the wages of Londoners.
The London living wage, in contrast to the £6.50 national minimum wage, is not mandatory. Employers are urged to pay the living wage, but reality shows that they often don’t. A study by professional services firm KPMG found that 22% of employees in London are paid less than the wished-for £8.80 per hour. Even worse, according to the Office for National Statistics, 110,000 Londoners are only paid the national minimum wage of £6.50 per hour. The situation is especially tricky for part-time, female and young workers, the KPMG study shows, because these are the people that are particularly badly paid.
Our Mayor delightedly told the Evening Standard that the number of employers paying the voluntary rate has doubled to 400 in the last year and includes big companies, such as Google, ITV or Nationwide. Still, it is only a small proportion of employers who want their employees to lead a comfortable life in London. As the figures show, of the 1,400 companies in London with more than 250 employees only 110 are signed up to the living wage scheme.
I still remember that, during an interview for a sales assistant position in a big London clothing company, I was told that their pay of £7 per hour was a ‘really good hourly pay’. If this had been my main source of income, as it was and still is for so many of my young, foreign colleagues, I would have had to live in a garage. There was never a word mentioned of the living wage.
What this shows is that voluntary kindness is not the way to go in a profit-led economy. Increasing the living wage alone will not help Londoners leading a worthwhile life in this city. The living wage might be a nice ideal, but it is not reality. I can’t imagine how one would be able to pay the average London rent of £1,160 (according to figures published by LSL Property Services in September) and still eat when earning £6.50 per hour. If Londoners really want to benefit, it is the minimum wage that needs to be increased. Maybe that’s a topic to push for Boris once he gets elected to Parliament next year.