I am a firm believer that the success of our capital – its competitive strengths, its diversity, and its creative energy – is driven by the talent and skills of the people it attracts.
London is a strategic asset and an engine for growth in the UK economy, and the health and productivity of its workforce is a key component.
London accounts for 24% of total UK GVA, according to the Office for National Statistics. Despite its success and contribution inequalities across its social fabric are stark; one in four Londoners live in poverty.
As Living Wage Week approaches, consider that we have approximately 580,000 low paid workers in the capital. According to the Living Wage Foundation, over a third of those workers have regularly skipped meals for financial reasons, and over half have used a foodbank. Inflation and the cost of living crisis have cast a long shadow and compounded the day-to-day challenges many Londoners already face in terms of housing, childcare and transport.
It is not a silver bullet, but the London Living Wage – paid at £13.85 by 130,000 employers across the capital – alleviates some of these challenges. Londoners benefitting from it now receive £4,700 per year more than those on the statutory minimum National Living Wage of £11.44 across the wider UK, reflecting the cost of living and working in London.
As a Co-Chair of the Make London a Living Wage City Campaign – supported by the Mayor and our colleagues at BusinessLDN – and as a leader at KPMG in London, I think there is both a credible business case for paying the London Living Wage at an organisational level, and also a broader economic one to drive growth of the UK economy too.
The business case is clear. Evidence from employers suggests a more positive, engaged and healthier workforce becomes a more productive one. In a Living Wage Foundation survey of accredited employers, 58% reported that paying the London Living Wage improved the retention, motivation, and commitment of staff.
It also serves to differentiate organisations, with 55% reporting that it had enhanced the quality of job applications and made them more attractive to graduates.
This resonates at KPMG and among our clients.
Our UK CEO Outlook for 2024 showed that 63% of business leaders think a lack of the right talent will negatively impact their organisation’s growth over the next three years. Furthermore, 69% think organisations need to invest in skills development and lifelong learning in communities to safeguard access to future talent.
Businesses prioritising growth and skills should therefore consider joining the 4,000 accredited employers in London.
KPMG has been supporting the UK economy for over 150 years. From our vantage point as a provider of professional services in every sector, we see the enormous potential that the London Living Wage can have in our capital, and that of the Real Living Wage across the wider economy. If 25% of low paid workers moved onto the real Living Wage across the economy, there would be a £1.7bn boost to the UK economy through the corresponding increases in productivity and spending.
But we are also clear-eyed about the challenges across our economy: sluggish productivity, weak wage growth and lingering inflationary pressures. Many employers may be concerned about their ability to pay their employees more, and those in work may be feeling lower paid than ever.
So, this year’s Living Wage week arrives at an inflection point in the debate on UK employment, particularly as it coincides with the new government’s early moves to introduce a wide package of enhanced workers’ rights.
At KPMG we are proud, founding members of the Living Wage Foundation. But like our peers we see efforts to eradicate low pay as part of a wider narrative, investing in people. This is where a consensus must be forged, between employers, employees, and policymakers.