Commenting on the interim report from the Living Wage Commission, Nerissa Williams, from the CIPD in South East Wales, said:
“The Welsh economy is growing faster than most other parts of the UK, apart from the south east and north west of England, according to official figures. However, Wales remains bottom of the table in relation to how much we are producing per head of population or the Gross Value Added (GVA).
“Unlike the Living Wage, the National Minimum Wage (NMW) is a statutory requirement for businesses across Wales and the UK as a whole and sets out a mandatory ‘pay floor’ with which all employees must receive. The NMW is enforceable by the HMRC and there are financial penalties attached to it should a business flout the wage requirements. The Living Wage, however, is a voluntary concept and this is where the problem lies.
“What we have found is that not all employers in Wales are in a position to meet the salary increase that the Living Wage commands, and by making it compulsory and forcing them to change their salary outgoings maybe counterproductive in the longer term. Instead, companies should be encouraged to look at how they can demonstrate a business case for those who are on the lowest earnings scales to improve their reward packages.
“The fact remains that Wales relies heavily on public sector employment and each department is having to make significant changes to the way it works in order to adjust to the cuts in government budget allocations. Add to this the large majority of SMEs whose businesses are fighting to stay afloat, it’s not a simple process just to switch from NMW to Living Wage. As HR and Reward professionals will recognise, salary is not necessarily the only element of an employee’s remuneration package, and there are other initiatives which can, and have been adopted by many employers, which should also be taken into account.”