Paying A Real Living Wage Could Boost Cardiff’s Economy by Millions    

Paying A Real Living Wage Could Boost Cardiff’s Economy by Millions    

Currently 24% of employees in Cardiff earn below the real Living Wage – approximately 140,000 people.

The real Living Wage is calculated according to what people need to make ends meet. The rate is currently £8.75 outside London, compared to the UK minimum wage of £7.83.

In a new report commissioned by the Living Wage Foundation, The Local Living Wage Dividend, the Smith Institute found that if just a quarter of those living on low incomes in the UK’s 10 major city regions saw their pay raised to the real Living Wage, those areas could benefit from a £1.1bn boost to the economy.

The research found that if a quarter of all low paid workers in the Cardiff Capital Region were given a pay rise to the real Living Wage, currently £8.75, 35,000 people would see an average annual pay rise of £1,170, or an extra £22 a week.

This increase in wages would also provide:

  • £24 million boost to the local economy
  • £15 million tax and benefit dividend to HM Treasury
  • £45m economic boost to the city region’s economy if half of the £13 million boost to the Treasury was returned to Cardiff, considering wider economic benefits such as increased local spending by low paid workers.

There are currently 140,000 people earning below the real Living Wage in Cardiff, a total of 24% of all workers in the region.

Dave Horton, Co-chair of Citizens Cymru Wales which leads the Living Wage for Wales campaign, said:

“This research shows how crucial it is that more organisations in Cardiff and the surrounding areas sign up as accredited Real Living Wage employers, and so lift their workers out of poverty pay. It is really disappointing that major organisations, including many receiving taxpayers’ money, are contributing to in-work poverty by paying less than the Real Living Wage of £8.45 an hour. We have a plan to work with Cardiff Council, who have shown real leadership on this issue, to make our city the first Living Wage City in the UK.”

The report highlights the role that leading local public and private sector employers such as universities, hospitals, football clubs and city airports can play in providing leadership on the Living Wage. It calls on local authorities to work with these key ‘anchor institutions’ to drive Living Wage take up in their towns, cities and regions, and to integrate the Living Wage to their economic development strategies. It recommends that they:

  • Become accredited Living Wage employers
  • Set clear targets for Living Wage take up in their cities and regions, and develop a plan with other key local ‘anchor institutions’ for how these will be met
  • Use their powers of planning and public procurement to encourage more local employers to commit to ensure their staff can live on.
  • Investigate the potential to create new real Living Wage buildings, zones and hubs in key public spaces

Tess Lanning, Director of the Living Wage Foundation, said:

“By championing the real Living Wage leading mayors and local authorities can build successful, dynamic local economies – and most importantly ensure that the proceeds from growth are fairly shared. We must see more step up to tackle problems of in-work poverty, regional inequality, and weak productivity.”

Paul Hunter, Deputy Director of the Smith Institute, said:

“Big employers often like to talk about the positive role they play in their local community. One way that they can go beyond the warm words is to pay their staff the Living Wage and demand their suppliers do the same. This is not just about good corporate citizenship. Evidence shows workers paid fairly are more productive. And, as our research shows, the Living Wage can also provide a boost for the local economy on which established employers are dependent.”

The report can be downloaded here.