Council announces living wage plans for Exeter

Paying workers a 'living wage' will help people out of poverty, create less reliance on benefits and give a much-needed boost to the local economy, Exeter City Council has said.

Exeter City Council Leader Pete Edwards today (Wednesday 19 June) announced plans to ensure that all staff working for the local authority are paid at least a 'living wage'. The policy is subject to due process and final approval at full council but would be the first to be implemented by a local authority in Devon.

Cllr Edwards hopes the Council's example will be copied by other businesses and organisations across the city.

A 'living wage' is defined as a wage that can meet the basic needs to maintain a safe, decent standard of living and allow people to save for future needs and goals. It is currently set at £7.45 an hour compared to a minimum wage (outside of London) of £6.19 for over 21s and less for younger workers. £7.45 per hour equates to a salary of £14,373.

"Recent research has shown that people living in Exeter earn less money on average than anywhere else in the South West." said Cllr Edwards.

"Paying people a living wage helps reduce poverty and dependence on benefits. It also means there is more money to be put back into the local economy, allowing Exeter to continue to grow and flourish," he added.

A recent paper to the Council's Executive showed that the lowest paid full-time workers living in Exeter receive £6.75 an hour compared to £6.97 in Plymouth and £7.09 in Bristol. The figure for England and Wales is £7.11. Part-time workers are generally paid less.

"These are difficult financial times for everyone but there are things that we can do to pull ourselves away from this challenging position and that is why we are taking a lead and proposing that all our workers are paid at least a living wage," said Cllr Edwards.

"We hope other businesses in the city might follow our example," he added, though the Council leader is putting no timescale on this ambition.

At the City Council there are 56 workers, out of a workforce of approximately 700, who currently earn just less than the living wage. The Council say that £6.42 is the lowest hourly rate they currently pay.

According to Cllr Edwards and cabinet member for the Economy and Tourism, Cllr Rosie Denham, increasing the hourly rate of these 56 individuals to the 'living wage' standard would cost the local authority around £25,000 for the current financial year but reduce the amount of benefit handed out by the local authority.

However the policy is not expected to be implemented until later in the year (the date is not confirmed), so the £25,000 figure is based on the cost for one quarter in 2013, with the annual bill estimated thereafter at £100,000 per annum. Although the Council stress that they have already saved £1m from the bill for senior management and plan "further efficiences", the expenditure may raise concerns given the cuts to local government funding and the enduring tough climate for business and for low and middle income earners generally.

Cllr Edwards and Cllr Denham insist they can afford it and argue that the primary objective isn't to save money but to benefit individuals and the city as a whole.

"Exeter has one of the highest disparities between wages and the cost of living in the country" says Cllr Denham.

She said the Council intended to listen to the views of employers and build support for the living wage by creating a forum from across a spectrum of local businesses and organisations. The forum would discuss solutions, as well as identifying the issues and concerns that face the business sector. The Council hope that the University may also help provide input.

"Locally owned independent businesses feeling the pinch may feel concerned but they may also appreciate the impact that higher wages can have on the local economy," said Cllr Denham.

She believes that Exeter's "substantial" number of low waged workers (the Council estimates that those paid below the living wage is around 15% of the city's working population) partly stems from some of the region's key business sectors - service industries, hospitality and tourism - and stressed the importance of growing other sectors:

"We are working on a knowledge based economic strategy," she said.

The living wage policy will be implemented in tandem with the Labour administration's housing plans, which include new building and bringing empty homes back into use.

"It's part of a bigger picture" said Cllr Denham. "We have to tackle it as a two-pronged approach."

"Low incomes mean people can't afford private rents, which means homes can't be built, which means contractors can't employ builders," she said.

Cllr Denham also stressed the importance of a public/private partnership:

"The public and private sectors are interlated. Many households work in both."

Cllr Edwards feels optimistic and argues that both employees and employers can benefit from improved motivation, a feeling of being valued and the benefits of easier staff recruitment and retention that the living wage would bring:

"It's not easy and businesses will need to find a planned way," he said.

"I hope the living wage will eventually become the new minimum wage for the country," he added.

"Exeter bucks the (national) trend because the city works together."

"We will succeed in this. I'm very optimistic."

What do you think? Are you a local business owner or an employee paid below the living wage? What impact, positive or negative, might a living wage have on you?