Businesses paying living wage ‘do better’, Sadiq Khan says

Businesses paying their staff the living wage “do better”, Sadiq Khan has argued, as he welcomed a rise in the London living wage.

The Mayor of London spoke to City AM at an event marking the five per cent increase for 140,000 workers, who will see their pay increase to £13.85 an hour.

Speaking in Camden, Khan said: “It’s really important for people who do a hard day’s work, to get a decent day’s pay.

“Since I’ve been Mayor I’m really proud that we’ve seen a six fold increase in the number of employers paying the London Living Wage, which has gone up almost 50 per cent.”

The Mayor argued employers also benefited from the uplift, which he said “improved recruitment, improved retention.. improved productivity”.

And he added: “We know that both businesses that are paying the wage do better. That’s why there are more than 4,000 employers in London paying the living wage. 

“And I want there to be fewer and fewer employers in London not paying the living wage. It’s currently 13 per cent and I want it to go down even more.”

But Khan also rejected concerns raised in the government’s own economic impact assessment of the workers’ rights bill that some firms might respond to higher wage costs by holding back pay rises and freezing hiring.

The report, produced by the government to measure the possible effect of the Employment Rights Bill, found most employers responded to hikes to the National Living Wage by absorbing costs, but “other responses” did include “cutting pay growth and recruitment”.

A recent ONS survey, the document stated, “on employer responses to future increases in employment costs tells a similar story”.

Some 17 per cent of firms said they would “reduce the number of employees”, while ten per cent said “limit overtime hours” and nine per cent said “reduce wages for other employees”.

Asked about these concerns, Khan said: “We’ve not seen the legislation yet. There’s a long way to go before the announcement of a bill, the bill being published, and then when it goes through the House of Commons and so forth. 

“I know speaking to Jonny Reynolds and Angela Rayner, they understand the importance of getting this right. I think being pro worker is being pro business. 

“I know the difference it makes having happy staff who have good rights in terms of attention and productivity and stuff, and I employ staff now as well.”