1. Economics
April 2, 2019

Work isn’t paying – but the North can act now to fix that

By Marcus Johns

Yesterday, the National Living Wage rose to £8.21 an hour, benefitting 2.4 million workers. But those workers are still paid less than they need to live –79p an hour less than the Real Living Wage of £9 an hour outside London.

Conventional wisdom suggests that work is a route out of poverty, and we live during a time where “record highs for UK jobs” are celebrated. But this is clearly not the full picture.

In the North of England, five years of talk about the Northern Powerhouse have yet to feed through to the wages northern people take home from work. The North’s employment rate is high, at 74 per cent. But weekly pay has fallen £21 since 2008 in the North and 1 in 5 jobs in the region pay less than the Real Living Wage, leaving 2 million working age Northerners living in poverty.

But in these challenging circumstances, the North is fighting back. With another metro mayor soon to join the North’s four existing elected mayors, there is another opportunity to demonstrate local leadership.

In the North, many public bodies are fighting back against low pay. Preston isn’t the only council with strong policies in this area, but it is rightly lauded for the Preston Model, using the Real Living Wage as one tool in its community wealth-building arsenal.

Other places are also fighting low pay. Sheffield City Council, Greater Manchester Police, and Northumberland, Tyne and Wear NHS Foundation Trust are some of 64 Living Wage Foundation accredited Northern public sector organisations.

When it comes to procurement, these organisations are working around and overcoming the legal and financial challenges often raised.

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But of course, there is more to work than decent pay: job security, autonomy, and training all matter to workers. These are things councils and public bodies can require of contractors now.

Mayors like Andy Burnham and Steve Rotherham are drawing up employment charters to promote their visions of decent work which feature secure, well-paid, and fulfilling jobs with training and progression. We need to see more of this work across the North.

The wider impact of decent work

Next month, the North of Tyne region elects its first Metro Mayor, who must look to prioritise decent work in this area too. As IPPR North has previously recommended, the successful candidate should implement a Real Living Wage policy, starting with those directly paid or contracted by the Combined Authority and then influencing other public bodies.

The mayor should develop an employment charter too, consulting with employers, workers and trade unions to encourage decent work principles in the wider economy.

The positive impact of these policies extends further than the workers who are directly affected. The IPPR Commission on Economic Justice found low wages are as much a cause of national low productivity as a by-product of it: this means more people being paid the Real Living Wage could actually help raise productivity. It could also help boost struggling local economies, as workers buy the goods and services they need locally. Furthermore, the Treasury stands to gain from increased tax revenues.

Clearly central government must take action on low pay for the full effect to be felt by all. But low-paid workers cannot afford to wait.

Local leaders can start making a difference to their communities now. They should take the opportunity to do so.

Marcus Johns is a Researcher at IPPR North. He tweets @CllrMarcus.

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