The vast majority of social enterprises in the UK pay their employees a Living Wage, according to Social Enterprise UK.
Of those that pay the Living Wage – currently £9.40 in London and £8.25 for the rest of the UK – 91% said it was ‘responsible thing to do and social enterprises are responsible businesses’, while 87% said that social enterprises are ‘good businesses and should be pioneers’ in adopting it. Two thirds (68%) of respondents said all social enterprises should pay the Living Wage.
One in five (20%) social enterprises surveyed do not pay the Living Wage – the main reason cited for this was the need to compete with ordinary businesses in open markets (71%), with some respondents saying they would need to reduce the number of employees if they paid the Living Wage. Half of those who do not pay the Living Wage (52%) said they didn’t because they are small and / or starting-up.
There are approximately 70,000 social enterprises in the UK, employing nearly a million people and contributing £24 billion to the economy. Research shows these social enterprises are thriving, outperforming their mainstream SME counterparts in nearly every area of business: turnover growth, workforce growth, job creation, innovation, business optimism, and start-up rates. Meanwhile, the average pay ratio between social enterprise CEO pay and the lowest paid is just 3.6:1 while for FTSE 100 CEOs, it stands at 150:1.
Peter Holbrook CBE, chief executive of Social Enterprise UK said: What the results of this survey show is that social enterprises are leading the way when it comes to pay. In an economic recovery dominated by low-pay and with ever rising inequality it is heartening to see that the vast majority of social enterprises see paying the Living Wage as essential to their mission as responsible businesses.
“Of course there are legitimate concerns to paying the Living Wage and adopting it is not the silver bullet which will break down structural imbalances in the economy. Many social enterprises are operating in sectors where wages are notoriously low and competition is fierce – and paying the Living Wage may well disadvantage them or leave them unable to compete.
Sarah Vero, director of the Living Wage Foundation, which sets the rate of pay, said: “We are delighted to know that around three quarters of the social enterprises surveyed are paying the voluntary Living Wage based on the real cost of living. We would encourage those businesses that are paying to accredit as Living Wage employers.
“Accreditation as a Living Wage employer sees businesses extend the Living Wage to all staff, this includes those working on contracts for an organisation as well as directly employed staff. Often those roles that are sub-contracted, such as cleaning, catering and security, are those most likely to be paid at a very low rate. Accreditation ensures better pay for all.”