City investors urge UK's top firms to pay workers living wage

28/11/2019

Letter addresses companies including Royal Mail, British Airways and JD Sports

Influential City investors have written to the chief executives of companies including Royal Mail, British Airways and JD Sports urging them to pay their workers a real living wage.

The letter calls on businesses to seek accreditation from the Living Wage Foundation, which makes sure companies pay employees and contractors an hourly rate higher than the national minimum. Signatories include the UK’s largest asset manager, Legal & General Investment Management, Candriam Investors Group, BMO Global Asset Management and responsible investment group Hermes EOS. The investors together control almost £2tn in assets.

The foundation’s real living wage – calculated as “what employees and their families need to live” – is £9.30 an hour across the UK, or £10.75 in higher-cost London. That contrasts with the £8.21 legal minimum for over-25s – dubbed the “national living wage” by the former chancellor George Osborne – or the £7.70 minimum wage for the under-25s.

Concern over low pay for employees has risen up the political agenda since the financial crisis, with British workers enduring the worst decade for real-terms pay growth since the Napoleonic wars of 1803–1815, according to the Resolution Foundation thinktank. At the same time, executive pay has risen dramatically.

More than 5,500 employers are accredited as living wage employers, but only 38 of the companies listed on the FTSE-100 index have signed up so far.

Pauline Lecoursonnois, who negotiates with companies for Hermes EOS, said: “The case is clear: a workforce that is fairly paid, well valued and respected will perform better than one that isn’t and therefore we are asking UK companies to consider paying the living wage as a key indicator of a responsible and sustainable business.”

Royal Mail, whose workers are appealing in court to try to strike over the Christmas period, was among the recipients of the letter. A spokesman said the “vast majority” of its employees earned more than the living wage.

Hargreaves Lansdown, the FTSE-100 investment platform, said it planned to gain living wage accreditation in response to the letter, which was organised by ShareAction, a campaign group.

The government-appointed Low Pay Commission on Wednesday delayed its publication of its recommendation for the national living wage, citing the purdah period ahead of the general election.

Other companies who received letters were the takeaway app Just Eat, the software company Aveva, the bookmaker Flutter Entertainment, and the manufacturers Halma and Smurfit Kappa.

Four of the companies had still not signed up to the living wage despite having faced investor pressure on the issue over the past year. They were IAG, which owns British Airways, the United Utilities water company, the pest control and cleaning company Rentokil Initial, and the Irish industrial group DCC.

BA said all its workers were paid more than the legal minimums. Rentokil said only a small number of workers were paid below the living wage as a starting salary. United Utilities and Just Eat said all direct employees were paid the living wage.

The property developer British Land said it pays all direct employees the living wage, but could not guarantee the pay rates of outsourced suppliers such as cleaning contractors.

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