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60 seconds on the impact of the living wage

Schroders ESG analyst Elly Irving discusses the financial and social impact of the living wage.

29 May 2015

Elly Irving

ESG analyst

What is a living wage?

A living wage is a wage that allows the earner to afford housing, food, healthcare, clothing and the basic necessities.

The living wage is higher than the minimum wage and within the UK 21% of the workforce earns below the living wage.

We looked at the business case for adopting the living wage. We investigated the cost of increased salaries versus the benefits.

Benefits of the living wage help offset costs

The companies that have already paying the living wage have seen benefits such as reduced employee turnover and better customer service.

We also looked at different sectors and where the exposure is greatest to living wage risk. We saw that in the retail sector there is the highest number of sub living wage workers.

Our in-depth analysis found that the potential costs could be offset by a third through the potential benefits of the living wage.

This is something that we continue to monitor and as active owners we are engaging with companies on this topic.