UK Living Wage increases by up to 9.8%. What does this mean for your organisation? | Issue #10
Your latest instalment of The Leadership Bulletin, covering the Living Wage, managing meetings and even car transmissions.
Welcome to tenth edition of The Leadership Bulletin.
For many of us, we’re now approaching or are already in the new financial year. It’s less psychologically powerful than the 1st January, but it still marks an important time to look to the future and think about the exciting prospects ahead.
I hope The Leadership Bulletin can play a helpful role in making 2022-23 a successful year for you and your organisation.
First up in this week’s Bulletin…
GOOD NEWS: WE’RE READING MORE.
Regular readers of the Bulletin will know I’m a big fan of business books - in fact, I like books in general. You can mark the seasons in my home by when we need to buy a new bookcase! And it seems I’m not alone. Last year, 212 million books were sold in the UK - the highest number in a decade. Lots of us have got the reading bug. Want to join in and looking for somewhere to start? Well…
A READING RECOMMENDATION.
Try reading The Surprising Science of Meetings by Steven Rogelberg. We all spend a lot of time in meetings, but how valuable are they to the work of the team? In this short but insightful book, Rogelberg draws on his experiences to share the proven practices and techniques that help managers and employees enhance the quality of their meetings. You can pick up a copy from my favourite bookshop, Blackwells, by clicking here.
IN FOCUS: APRIL SEES A BIG INCREASE IN THE UK LIVING WAGE.
The beginning of April is always an important time, and not just for those of us who run businesses. The past week in the UK ushered in Council Tax changes, National Insurance increases, and a surge in energy bills. The good news for UK workers on the Living Wage, the minimum payable wage in the UK, is the beginning of April also saw a significant pay rise.
The UK Living Wage was introduced by then Chancellor George Osborne in 2016 as a revamp of the Minimum Wage. In the first year it was introduced, a rise of 50p per hour from the previous minimum wage saw low-pay, full-time workers gain around £910 per year. Six years later, workers are seeing another thousand pound pay bump as the Living Wage goes up to £9.50 for workers 23 and over. Here are the new rates and the increases since last year:
The obvious thing for employers to worry about is the affordability of the pay increase. However, given that paying the Living Wage is mandatory, rather than a choice, that isn’t something I’ll focus on for now. Instead, I think this is a time for employers to ask themselves: what impact does the Living Wage have on our other staff?
Imagine an employee who in 2016, when the Living Wage was introduced, earned £9 per hour. Then, the gap between their pay and the Living Wage was £1.50 per hour, or several thousand pounds per year for a full-time employee. Let’s assume that the £9 per hour employee received a cost-of-living pay rise of 2% per year since then; today, their pay would be £10.13 per hour. What about a new colleague arriving today at an entry-level job on the Living Wage? They would receive £9.50 per hour. What was once a gap of £1.50 per hour between the experienced employee and a new worker would now be a gap of just 63p.
I’m not seeking to make a point about the rate of increase in the Living Wage (which I support), or about the historic cost-of-living increases offered by employers. Nor am I seeking to argue that there should necessarily be significant pay gaps between different members of the team depending on their role or experience. Each situation, and each organisation, is different.
My point is simply this: several years of significant increases in the Living Wage is great for those who receive it, but for those who are paid just above the threshold, the gap between their salary and an entry-level job may have shrunk significantly. This could lead to frustration from longstanding staff. Indeed, in a few more years it is even possible that your longstanding team member in a relatively low paid job will have seen the Living Wage catch up with their salary and find that they are now at the bottom of the salary ladder. This is something employers should be thinking about now as part of their plans to fairly reward committed staff and retain essential skills in their workforce.
ON A DIFFERENT NOTE.
I’m introducing a new section which will highlight something in the news that I’ve found interesting, but which is not necessarily about leadership or management. This week, I was reading in the Wall Street Journal about one of the oddest differences between America and Europe: car transmissions. Just 1% of cars made in America are manual, yet 80% of cars driven in Europe are. So what’s going on? Is it cultural, with Americans using technology to make their lives easier, whilst Europeans maintain the tradition of car driving with manual gears? If you have any thoughts on what explains the difference, I’m all ears!
STILL TIME TO LET ME KNOW.
What are your top tips for relaxing after work? As I mentioned last week, switching off and winding down after a busy day or week is critically important; it’s good for our mental health, creativity and focus. There is a great piece from Forbes that you can read on the topic, called ‘The Benefits Of Resting And How To Unplug In A Busy World’. But I want to know how you relax after a busy time at work. I’ll share some of the best suggestions in a future bulletin. Email me on lee@edfolio.co.uk.
5 April 2022