Research

Research Spotlights

The Foundations for the Living Wage

By Professor Donald Hirsch

Some people ask me if I’m the founding father of the UK Living Wage. I have to say that’s not quite true. It started before me. I can’t take credit for inventing it – but I have helped to shape it. I’ve helped to make it work, and I am proud of that.

Professor Donald Hirsch Professor Donald Hirsch

The present crusade for a living wage started organically, through local community groups rather than national bodies, first in the United States and then here. I became involved because my research at Loughborough University’s Centre for Research in Social Policy (CRSP) has been focused on minimum incomes.

CRSP is a respected research centre, with a first rate team of researchers: our findings and analysis rest on a collaborative effort, not just my own expertise. I’m a former journalist. I worked at The Economist before moving to the OECD (the Organisation for Economic Cooperation and Development), then into consultancy and later academia. It’s an unusual career path, I suppose; a wiggly line from journalism to here, but I’ve always been interested in policy, analysis, good writing and the fortunes of the most disadvantaged people in our society. In that respect, you can hopefully see a common thread.

It’s more than just the food they could buy and the house they live in – it’s about the opportunity and choices life offers them. It’s carefully researched and it resonates. It works. And because of that, it has credibility. It has influence.

The Living Wage calculation derives from our research, funded by the Joseph Rowntree Foundation, on the Minimum Income Standard. This aims to find out precisely what kind of income people need to live on. The research involves real people, living real lives, in identifying minimum household needs. This matters because it makes the findings credible and tangible. We listen to what people deem to be an acceptable standard of living. It’s more than just the food they could buy and the house they live in – it’s about the opportunity and choices life offers them. It’s carefully researched and it resonates. It works. And because of that, it has credibility. It has influence.

Our research on the Minimum Wage

When we first did this research in 2008, we discovered very quickly that the Minimum Wage, then set at a cautious £5.52 an hour, wasn’t enough; that even if you were a single person, working full time, you wouldn’t earn enough to buy the minimum basket of goods and services that our research considered to be essential. The Minimum Wage wasn’t doing what it needed to do. There needed to be something more.

The idea of a Living Wage has been around for more than a century, and has been revived in the past 20 years. At CRSP we provided the tools to quantify it. The basis for rates set in different parts of the country was often vague or inconsistent. We wanted to be more exact. So in 2011, at the request of the newly formed Living Wage Foundation, we used our research to calculate a UK rate, which became the basis for being recognised as a ‘Living Wage Employer’.

When we started doing our Minimum Income Standards research, we’d hoped it might have a general influence, for example as a benchmark taken into account when setting benefits. But its use for the Living Wage calculations made its influence far more direct, particularly as a growing number of employers signed up to it. The Scottish Government signed up. The Church of England. Large local authorities and universities. John Lewis. Ikea.

Introduction of the National Living Wage

And then, in the summer of 2015, the Conservative Government jumped on the bandwagon. Their competing, but not evidence based, National Living Wage was more about politics than social policy, but nevertheless its announcement marked an important moment. The Conservative Party opposed the creation of a Minimum Wage when it was introduced 17 years ago, so for a Tory Chancellor to introduce a ‘Living Wage’ – even though it fell short of what we were proposing – was a huge shift in policy. I know our work has influenced that. The Government estimates that about six million people’s pay will be higher as a result of this policy. It’s a rare moment for an academic to know that their research has had an influence on so many people’s lives.

What will happen from here? I don’t know. We’ve succeeded in providing tangible evidence for setting the annual accredited living wage rate, and will continue to update this research.

But there’s also much to do in thinking how improved wages and state benefits should interact. I’m developing new analysis of how the Government could ensure that working families can enjoy an adequate living standard, without having to work all hours. This requires pay and tax credits to be looked at together. Finding a solution is not beyond us, if we’re willing to work on both fronts.

Am I optimistic about that? Well, I’m not sure. We can develop blueprints; whether governments follow them is another matter. But 10 years ago I never thought a Conservative chancellor would announce a Living Wage. So let’s wait and see…

Donald Hirsch-02

Professor Donald Hirsch

Director

Centre for Research in Social Policy (CRSP)

Donald is a former journalist and international policy consultant, who was Poverty Adviser to the Joseph Rowntree Foundation for the ten years prior to joining CRSP in 2008.

Send email Visit my profile

Share this page