Brighton and Hove business leaders to debate the cost of a ‘living wage’

Business leaders from Brighton and Hove are to discuss the campaign for a living wage this evening.

Brighton and Hove Chamber of Commerce is hosting the discussion as one of its Big Debate series at City College Brighton and Hove in Pelham Street, Brighton.

The speakers in favour of the idea are chamber president and business owner Julia Chanteray and Ian Tew, head of workplace, Europe, at KPMG.

Ben Ferrer, from My Hotel, and Adam Brian, from Due South, will speak against.

Pay is a sensitive topic. From bankers’ bonuses to unemployed youngsters doing work experience at Tesco for free, this a subject that excites people’s emotions.

Labour brought in a statutory minimum wage, pointing out to critics that America had already done so. But unions say that it’s not enough to live on.

If you live in Brighton and Hove, that’s probably true. Which is why we’re now hearing about something called the living wage.

Essentials

This is a level of pay that is based on what’s needed to provide a family with the essentials of life, rather than a legal bare minimum.

It’s not new but it’s only within the past year that it seems to have really taken off.

Prime Minister David Cameron said: “It is an idea whose time has come.”

And there is some support for it locally. The Green-run Brighton and Hove City Council has introduced the living wage for council staff.

Several notable private sector employers, such as the Amex stadium, are also backing it, and it is being promoted by the introduction of a Brighton and Hove Living Wage Commission.

The motion being debated this evening (Tuesday 28 February) is: “This house believes a voluntary living wage of £7.20 an hour would be good for business in Brighton and Hove.”

The debate looks at the growing campaign to replace the national minimum wage with a noticeably higher living wage and questions the business case for paying a living wage.

Fighting

Of course, few businesses welcome regulation and many business sectors have a reputation of fighting for the right to set the lowest pay possible should they wish.

Some businesses argue that they cannot be profitable if they pay more than a minimum wage while others say that higher wages means fewer employees, adding to unemployment at a difficult time.

But Julia Chanteray, who apart from being chamber of commerce president also chairs the Living Wage Commission, said: “Some employers are reluctant to pay above the minimum wage, it’s true.

“But I strongly believe that the living wage is not only more equitable but make business sense for companies and for the business sector as a whole.”

The chamber said that a number of eminent Brighton business leaders were expected to be speaking from the floor of the debate, which will take the traditional Oxford Union debating format.

The debate will be chaired by Rob Shepherd, of the Brighton-based international press release agency Press Dispensary.

He said: “This is a debate that addresses perhaps the most fundamental aspect of employment: pay.

“Clearly it’s an emotive subject for employees but the question of minimum wage v living wage is also a very live one for employers trying to get the best from both their staff and their bottom line. It covers morals and ethics as well as the business case.”

For 

Julia Chanteray believes that paying more pays off. She said: “Brighton’s businesses should embrace the living wage.

“We’ve been looking into the idea of a setting a voluntary living wage of £7.20 per hour for Brighton businesses.

“The living wage is different to the national minimum wage of £6.08 per hour, which is the legal minimum you can pay staff.

“We’ve calculated (well, we got a nice man called Donald Hirsch to calculate) the amount that someone needs to earn to live a decent life in Brighton and this came out to £7.20 per hour.

“This figure means that someone can afford to pay rent in a shared house, eat, have a mobile phone (but not a fancy iPhone) and have a cheap holiday in the UK.

“The research takes into account tax credits and the cost of rent and childcare at Brighton prices.

“Why is this a good idea? Paying the living wage is a good thing to do. It makes you feel good.

“Two of my clients asked me recently what they should pay interns. They didn’t have much money to play with, but were uneasy about paying the minimum wage as this felt too low.

“I explained about the living wage, and they looked relieved that they could pay their new staff at a decent rate without breaking the bank.

“But, besides having a clear conscience, is paying the living wage good for business?

“There are a number of reasons why paying the living wage – or at least moving towards this figure – can help businesses.

“There’s the old adage, ‘if you pay peanuts, you get monkeys.’ And judging by the customer service in some of the businesses I know are paying below the living wage, some businesses are employing monkeys.

“Paying a living wage means that you’ll attract better employees.

“And remember what a hassle recruiting new people is. Interviewing, testing, checking references, inductions and training – no business person particularly enjoys these tasks.

“Paying the living wage means that staff are more likely to stay with you for longer, so you don’t have the hassle of finding new people and training them up.

“Paying below the living wage means that your staff are more likely to take on a second job to make ends meet.

“If employees have another job, they’re less likely to have the enthusiasm or energy to work hard for you.

“You want them to concentrate on their work, not be falling asleep at their desks – or worse, moonlighting while they’re supposed to be at work.”

Against 

My Hotel general manager Ben Ferrer is also involved in the Brighton and Hove Hoteliers Association and the Tourism Alliance.

He warned that higher pay could mean fewer jobs. He said: “Adam Brian, from Due South, and I will be opposing the proposal that ‘a voluntary living wage of £7.20 an hour would be good for business in Brighton and Hove’.

“We are opposing the introduction of a Brighton ‘living wage’ on behalf of the vast majority of tourism and hospitality businesses in the city.

“We take the view that in difficult economic times such as these, to create a program – albeit well intended and voluntary – that stigmatises those who are unable to conform will be detrimental to many leisure businesses already struggling to survive, especially the locally owned and independent businesses for which Brighton and Hove is so famous.

“It is important to state clearly that it is not our sentiment that people should not be paid more, simply that now is not the time to be creating social rules that interfere with our businesses chances of survival.

“The leisure industry in particular employs a great many people – its largest overhead – at the rate dictated by the national minimum wage.

“It is also experiencing falling revenues across the board as recession-hit families cut their discretionary spending.

“Given the example set by London, where the program is largely ignored by the leisure industry, there can be little benefit in focusing energy on this to increase the financial living standards of those affected, as opposed to applying the same focus in other areas.

“Brighton in particular is famed nationally for being the home of the independent, be it a shop, café, bar, restaurant or attraction.

“The national companies in this industry will be sure not to engage in the discussion – as is the case in London – therefore creating an uneven playing field, drawing only negative attention to those locals who do not – or cannot – afford the extra.

“Let’s not create a local barrier to prevent our local businesses from succeeding, bearing in mind that if they fail, there will be fewer jobs.

“For those who think that it can’t make that much difference to business owners, we would ask them to consider the additional costs of national insurance employer’s contributions (NIECs) which go hand in hand with the increase.

“Further to this is the career ladder of the industry, which is almost entirely on the basis of time served.

“Their supervisors, managers and line managers must also have an increase to keep the ladder appealing to new employees.

“And with that comes the associated NIECs, of course.

“Most shocking are the sheer numbers of hospitality businesses that struggle to make a profit at all.

“For these owners, being stigmatised locally while giving everything they have, including their homes and much of their time and energy, could be just enough to extinguish the flame of their entrepreneurial spirit.”

Adam Smith

Business leaders and free markets proponents often cite Adam Smith in support of their laissez faire approach. He is the guru for those who oppose regulation but prefer to rely on what Smith himself described as the invisible hand of the market.

And yet, although he was the father of economics, he was also a moral philosopher.

In The Wealth of Nations he argued that higher real wages led to the “improvement in the circumstances of the lower ranks of people” and that this was to the benefit of society as a whole.

Smith argued for economic growth and a system of liberty that would enable the labouring poor to secure sufficiently high wages to enjoy an acceptable standard of living.

He wrote: “Servants, labourers and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconvenience to the whole.

“No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.

“It is but equity, besides, that they who feed, clothe and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged.”

It is only in the past 10 to 20 years that campaigners for social justice have emulated free marketeers by citing Adam Smith in support of their position.

After all, why would genuine free marketeers want a monopoly!