On the face of it, an increase of 20p an hour in the rate of pay for lowest paid workers seems like a reasonable ask. Yet the implications of this increase run much deeper than you might think, making it potentially prohibitive for many employers, including my own.
I work at Leuchie House, an independent charity based in East Lothian which provides short respite breaks for people living with a range of longterm medical conditions, including MS and Parkinson’s.
Since it was introduced, Leuchie has been proud to ensure all staff receive at least the living wage.
There can be some confusion over the various different national wage rates so it’s worth clarifying that the Living Wage differs from the UK Government’s National Minimum Wage and National Living Wage in that it is voluntary. The Living Wage is calculated annually based on the cost of living, so it more closely reflects the minimum amount people need to earn to get by. The new voluntary rate is £8.45 – £1.25 higher than the National Living Wage for over-25s.
At Leuchie House, one of our strategic objectives is to be an employer of choice – an organisation which provides a supportive, nurturing environment where staff can thrive. While there’s much more involved in that than just pay rates, ensuring everyone receives a fair rate of pay that allows them to provide for their families is an important part of it.
Why, then, did the news of a 20p an hour increase provoke such concern from so many employers? There are two main factors. Firstly, it’s about the differentials between rates of pay for different types of staff.
At Leuchie we have a variety of roles including registered nurses, care assistants, housekeepers, cooks, fundraisers, administrators and managers. We don’t differentiate pay rates based on age as the Government’s National Minimum and National Living Wage do. We view all staff equally and pay them appropriately for the job they do, regardless of their age.
As a result, if we increase the rate of pay for one category of staff, this clearly has an impact on the differentials between the rates we pay all our other employees.
In Leuchie’s case, one sixth of our employees are on the living wage, the lowest pay band. If we increase their pay by 20p per hour, this would significantly reduce the differential between what we pay them and the rate their colleagues on the closest pay bands receive. Any change affecting one group of staff has a knock-on effect to everyone else. It means that if we increase one rate of pay, we need to apply the change across the board.
The other major concern about the latest increase in the voluntary Living Wage is the scale of it. At a hefty 2.4 per cent, it is significantly higher than we would usually be able to offer.
If we were to award a pay increase of 2.4 per cent now across all our categories of staff, this would add a staggering £61,000 to our annual wage bill.
We believe wholeheartedly in valuing and rewarding all our staff. With so much of what we do based on offering personalised care and support, our team is without a doubt our strongest asset and the reason we are able to deliver a five-star service to all our guests.
We have now entered into discussion with our Board of Trustees to determine the best way forward for Leuchie. Increasing wages is only one way of rewarding staff and we may have to consider an alternative, more sustainable package of benefits.
We have some difficult decisions in front of us in the coming weeks as we weigh up our options. But, whatever decision we reach, we will do what is right for Leuchie, its staff, its guests and its future.
Jodie Martin, HR Manager, Leuchie House