By Oliver Smith on Wednesday 14 April 2021
Just 7,000 UK companies currently pay a Living Wage, and less than half of the FTSE 100.
In a recent survey, PensionBee found 33 per cent of its customers would prefer to divest from companies that don’t pay the Living Wage.
This came out in the pension provider’s routine work to ensure its pension plans are aligned with its customers’ expectations.
A far larger 83 per cent of respondents said they expect companies in their pension to pay all their workers a Living Wage, but it’s the 33 per cent who want to divest completely which obviously drew PensionBee’s attention.
As a reminder, the Living Wage (£9.50/hour) and London Living Wage (£10.85/hour) is a voluntary higher UK minimum salary based on the actual cost of living, and beyond the statutory minimum wage of £8.91/hour.
“Pension savers recognise both the huge negative impact to society that poverty pay brings and also the risk to the long-term sustainability and profitability of these companies.”
Interestingly, social issues like not paying the Living Wage actually ranked higher than environmental issues among those surveyed.
However, as pointed out by Reilly and PensionBee, Living Wage adoption remains painfully low.
Just 43 companies in the FTSE 100 pay all their staff and contractors a Living Wage, and according to the Living Wage Foundation there are only 7,000 accredited Living Wage employers in the UK.
The problem and challenge for asset managers is that so few companies are currently signed up to the Living Wage, that creating a balanced pension fund that only invests in such companies would be a tall ask.
That said, as we’ve seen with all kinds of environmental, social and governance issues over the last few years, change is possible.
As Martin Buttle, head of good work at ShareAction puts it: "savers expect pension funds and their asset managers to set high stewardship standards on good work/quality of work.”
“This research shows that savers clearly recognise [the Living Wage] as a baseline requirement.”