Category Archives: child poverty

New home for NE Child Poverty Blog

Thank you for visiting/following the NE Child Poverty blog here at http://www.northeachchildpoverty.wordpress.com.  All good things must come to an end, and that applies to this blog.

But fear not, it lives on in another home: from now on, NE Child Poverty Commission blogs will be posted at http://www.nechildpoverty.org.uk/blog.  Please head over there and follow us.


Few and far between: Living Wage Employers in the North East

This post should really be appearing in the new look Commission website, but that will not go live for another week or so – watch this space.  In the meantime, I’m posting it here.

The Living Wage Foundation have kindly provided details on the living wage employers in the North East, and I’ve done some simple analysis, below.  This is not perfect as:

  • it omits unregistered Living Wage employers
  • it does not reflect the many employers who are working towards paying a Living Wage
  • it only reflects a snapshot in time, and is already out of date
  • it is based on the published locations of the organisations, which may not be where their main employment is based

Despite these caveats, it should hopefully spur some people into doing more to promote the Living Wage within their local area.  Because the bottom line is we need more Living Wage employers in the North East.

[In all of the graphs below, the vertical axis shows the number of accredited Living Wage employers in the region at the beginning of April 2014]

1.  Size and Sector

Living Wage employers in the North East are predominantly small, voluntary sector organisations:

Size   sector

2. Industry

Reflecting this, most Living Wage employers describe their industry as ‘Charity’, but there is a wide range of other activities covered:

industry

 

3. Geography

The main cluster of Living Wage employers is, perhaps unsurprisingly, found in Newcastle, especially in the West End.  There are some Living Wage employers in most parts of the region, but not all: there are none in Sunderland, South Tyneside, Darlington or Stockton.

LA Area

Of the region’s MPs, Chi Onwurah has comfortably the most constituent Living Wage employers, and there are 20 MPs, almost two thirds of the region’s MPs, where none of the employers in their constituency is a registered Living Wage employer.

constituency

If you are, or know of, an employer working towards Living Wage accreditation, or have recently become accredited, please let me know.


Family Support and Child Poverty

Steve Crossley, freshly released from the burden of responsibility for this blog, has penned a readable report on the role of Family Support in addressing Child Poverty: ‘Family support’ and child poverty.

Based on a review of available evaluation evidence, Steve concludes that family support projects, while important for helping families, are NOT a way of tackling child poverty, because while they tackle some issues caused or exacerbated by poverty, but do not tackle the causes of that poverty.  He points out that the scale of resources invested in supporting families is dwarfed by the resources that are being taken away from families through welfare reform, cuts to public services and falling real wages.


Implementing the Living Wage in local authorities

This week is Living Wage Week in the UK and, as part of this, we have just published our fourth Working Paper looking at the challenges and obstacles local authorities have faced – and overcome – in implementing the Living Wage.

The UK Living Wage is £7.65 and, at the time of writing, a number of local authorities in the North East (and hopefully beyond) are considering how they can implement the Living Wage. At present, none of the 12 local authorities in the region pay all of their staff over the UK Living Wage. During discussions with a number of local authorities, they have expressed concern over what the Living Wage might mean for pay structures, or for commissioning and procurement arrangements. These discussions suggested that a Working Paper exploring how other local authorities had appraoched these issues might be of benefit to local authorities who have yet to implement the Living Wage.

The Working Paper can be accessed by clicking on the image below, and below this are two related presentations that I have given recently looking at the wider role of employers in tackling poverty in the UK.

Working Paper 4 – Implementing the Living Wage in Local Authorities

Paper 4

Presentation delivered to South Tyneside Living Wage Commission (June 2013)

STLW

Presentation delivered to Business in the Community Peer Learning Network (October 2013)

BITC

If you would like any more info on our work with employers in the North East and the role they can play in tackling poverty, please feel free to get in touch with us.

Kind regards,

Steve

s.j.crossley@durham.ac.uk


Valuing the person over the function

Why Paying a Living Wage Makes Business Sense

Guest post by David Van der Velde, Managing Director of Web Development Company, Consult and Design International.

Consult and Design recently joined hundreds of other employers in pledging to pay a living wage to all our staff, see www.livingwage.org.uk/employers. In this blog post, I will clarify why this is a positive move for our business, for our staff, for our clients and for society at large. I will explain why I am advising businesses to join us and other living wage employers such as PWC, Amnesty, NCVO and KPMG as well as my thoughts on what the living wage (or an increase in the minimum wage) means for how we think about our staff and where government should be targeting public policy.

So what are our reasons for becoming a Living Wage employer?

Consult and Design is a knowledge-based business, investing heavily in the skills of our workforce. We know the value of bringing good people into the business, giving them the proper financial support and training in order that they can contribute to the success of the business, not just by doing their job adequately but also by staying committed to the on-going success of the business. When staff are treated well they put their whole self into the job. By treating our staff well, we attract talented and creative people who are constantly finding new ways to improve what we do and the way do it.

Staff who feel valued and respected are more likely to go the extra mile to provide a good service to our clients and make sure that the work they produce is of the highest quality.

The alternative to looking after our staff in this way would be increased staff turnover (with associated recruitment and training costs), more sick leave, reduced productivity for us and a lower quality of work for our clients. This really isn’t an alternative. (See 1. “The Business Case for the Living Wage”)

What about unskilled workers?

All this is easy enough to say for a highly skilled, knowledge based business, but there is an argument that a higher minimum wage or ‘Living Wage’ will force some businesses to shed unskilled jobs in order to accommodate the increase in costs, or alternatively pass higher costs on to their customers.

Will consumer prices rise?

In terms of higher costs to the consumer, if paying the living wage was accepted as the norm, then without any government intervention the tendency would be for this to increase the costs of production and therefore the price paid by the customer. Studies have found however (2), that much if not all of this loss can be offset by reductions in staff turnover and the associated recruitment and training costs. As stated above, the improved staff loyalty that results from paying a living wage results in greater productivity (again offsetting costs) and better quality of work (meaning better quality for the customer.) With this in mind cost increases are likely to be marginal and customers will see a rise in the quality of the goods/services they purchase, resulting in better overall value.

Will unemployment increase?

Before the minimum wage was introduced in the UK in April 1999, it was opposed by business lobbies and some on the political right, with David Cameron quoted in the Stafford Chronicle, 21 February 1996 saying  ‘Labour’s plans for minimum wages, would send unemployment straight back up.’ This has not been borne out by data (3) – empirical work on the impact of the introduction of the minimum wage suggests that ‘while it may have had an adverse effect on employment in particular sectors, the overall effect on employment has been broadly neutral.’

How should businesses change the way they work to meet the living wage standard?

In short, if businesses are given enough time to plan for the change then smart businesses will recognise the need to change the way that jobs are organised so that the value their staff contribute can make paying the living wage viable.

In some sectors, for smaller businesses and in certain contexts it may be necessary for public policy to offer financial support and incentives to counteract any increased burden on employers, which could stifle enterprise and growth.

This is less of a problem for the knowledge based businesses, where investment in staff is the norm and retention of trained staff a priority. For businesses employing a large proportion of unskilled, minimum wage staff the culture change needs to be a bit more radical.

Moving from a ‘function-centric’ to a ‘person-centric’ employment model

We need to move away from the ‘function-centric’ model where a business owner asks a question like –  “what’s the cheapest way I can keep the floor clean?” to a “person-centric” model where the question is framed as “how can I get the best value out of employing Mary?”

Once the question is framed in this way the business becomes more interested in the employee as a whole person, with all the potential they bring. This increases the likelihood of the organisation wanting to invest in Mary’s training and future productivity.

The social impact of low pay

The final argument for paying a living wage lies in the impact this has on the communities in which we live, work and do business.

At Consult and Design we work with a lot of voluntary sector organisations some of whom support disadvantaged children, families and communities. The Joseph Rowntree Foundation’s report (4) on ‘The Role of the low pay, no pay cycle in recurrent poverty’ shows that low pay and the associated job insecurity has a significant detrimental impact on health, child poverty and debt in communities.

So should government act and how?

These days, everyone would agree that it makes sense for governments to intervene to prevent business from polluting the environment because of the negative impact on communities and the cost to the public sector of cleaning up. In the same way it makes sense for public policy to take account of the effect in communities of low pay and the cost of dealing with the resultant social problems further down the line.

By increasing the statutory minimum wage to a living wage level, the public sector will make long term savings, which far outweigh the potential costs incurred by businesses.

That said, at Consult and Design our experience of recruiting staff has meant investing heavily in their skills, putting in time to train staff and pay their wages while they learn. We have benefitted from subsidies to recruit young people, which have offset some of these costs and enabled us to create permanent well-paid jobs for the young people we recruit.

If we can recognise the benefit to the public purse of creating well paid jobs and training staff, then there ought to be a mechanism for supporting and rewarding this activity.

I would like to see a system where small to medium enterprises (SME’s) could employ new staff at a lower rate whilst they are in training, with the difference in pay being made up by the government. The success of businesses in creating permanent posts from these subsidised contracts should be recorded to prevent abuse of the system, to reward the business that are successful employers and to inform minimum wage job seekers about those firms where they have the best opportunities to progress.

1.             The Business Case for the Living Wage

https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&ved=0CFEQFjAD&url=http%3A%2F%2Fwww.unisoneastern.org.uk%2Fassets%2Fdownload%2F841&ei=j8tSUqyqBKrK0QWn8oGoAQ&usg=AFQjCNGrCQQvU4x3xcY1ZpAXyM89jiN0OA&sig2=ubgrrMY33oLA55A30-1lQg

2.         Employers’ Role in the Low Pay, No Pay Cycle

http://www.jrf.org.uk/publications/employers-role-low-pay-no-pay

3.         “The Employment Effects of the National Minimum Wage”,

Economic Journal, 114, C110-116.  Stewart, Mark B. (2004b)

4.         ‘The Role of the low pay, no pay cycle in recurrent poverty’

http://www.jrf.org.uk/publications/understanding-recurrent-poverty

David Van der Velde, Managing Director of Web Development Company, Consult and Design International.

www.consultanddesign.com


North East Racial Equality Conference 2013

Colleagues at Durham University are organising a major conference on the theme of ‘Racial Equality, Diversity and Public Policy in the North East Region’ which will take place on Wednesday 13 November at Ustinov College in Durham.

There are very few places remaining for the event but you can still book, if you are quick, using the form here and you can view some of the workshops here

If you would like any more details please contact Caroldevanney@hotmail.com or gary.craig@durham.ac.uk

More information on the conference can be found on the conference blog here

Kind regards,

Steve


How should policymakers respond to economic leakage from the North East?

Guest post by Luke Hildyard of the High Pay Centre

HPC

Most North Easterners will be familiar with the flawed narrative of dependency. The region is supposedly too reliant on public sector jobs. The North East receives more in public spending than it contributes in taxes. London and the South East are the motor of the UK economy, supporting poorer regions.

Research by organisations such as ipprNorth has done a great deal to challenge this crude characterisation. It is not just the amount of public spending in a region that counts, but the quality – the North East loses out in terms of the kind of transport and infrastructure spend that generates economic growth. The region does not have an especially high number public jobs. They just form a higher proportion of the total because of lower levels of private sector employment.

Nonetheless, the stereotype endures to some extent. Certainly there is a consensus about the need to ‘rebalance’ the UK economy – meaning stronger private sector growth in regions like the North East, reducing redistribution via public spending from South to North.

What this debate too readily overlooks is the transfer of wealth in the opposite direction via big corporations operating in the North East but based outside the region. Most private spending in the key sectors that account for most North East household income is eaten up by major companies – supermarkets, energy companies and mobile phone networks. Major clothing retailers, chain pubs and restaurants, betting shops, payday lenders. What jobs these companies provide are generally low-paid with limited opportunities for career progression. They do not create extensive supply chains within the region.

If a substantial proportion of whatever household’s earn is instantly transferred out of the North East, the task of growing the regional economy becomes that much harder. The High Pay Centre will publish a report this week with the intention of starting a debate about corporate economic dominance in the North East. The launch event takes place at Newcastle University on Friday October 25 at 12pm and readers of this blog are very welcome to attend.

Luke Hildyard

Head of Research

High Pay Centre

www.highpaycentre.org


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