Focus on fairness
To mark the 30th birthday of the Institute of Business Ethics, I want to celebrate the role of fairness – and in particular, fair wages – in promoting ethical business cultures.
The Institute of Business Ethics was created to promote high standards of business behaviour based on ethical values. This was a big and important endeavour for the time. The 1980’s was an age of remarkable transformation of markets but not a time normally associated with the rise of corporate responsibility. With the IBE came an idea that values and beliefs should guide the conduct of businessmen and women.
There is nothing about the idea of fairness that most would argue with. The pursuit of fairness galvanises politicians across the spectrum and is a concept that resonates even with the smallest children. But it is, of course, an entirely subjective concept. What is fair to one might be unfair to another. There are times, however, when an idea captures the imagination of the majority and its simplicity encapsulates the notion of fairness perfectly. For me, the Living Wage does exactly that.
The central proposition of the Living Wage is that it is a rate of pay calculated as one where you do more than just survive. That you could live a life free from the oppression of poverty. That no matter what job you did, it was only fair if you worked, you deserved to earn enough to live a decent life.
We now know the majority of people who live in poverty live in a household where someone works. In other words, it is a myth poverty relates to the ‘work shy’ or the idle. It seems particularly unfair the majority of people in poverty earn their poverty, they don’t claim it.
The Living Wage is not the same as a statutory minimum wage, which considers wider economic influences and the labour market as a whole. The Living Wage is all about the individual: their life and that of their family. For Living Wage employers, it was a voluntary choice to go above and beyond the statutory minimum. We did it because we wanted to, not because we had to. These employers discover many happy consequences too: retention rates increased, employee engagement improved and company reputation benefitted.
So, to a large, UK listed headquartered company, SSE found the case made by the Living Wage campaigners highly compelling. How could it be fair some of our employees could be earning a rate of pay that may mean they would be on the bread line?
So in 2013, SSE became the 322nd company to become an accredited Living Wage employer. We were the biggest company at the time to join the movement, the only energy company and one of the first in Scotland. We increased the pay of 158 employees who were receiving the national minimum wage and we began to implement a ‘Living Wage Clause’ into our service and works contracts. If SSE employees were to receive a Living Wage, it seemed unfair if contracted workers earned less. An estimated further 600 contracted workers receive a pay rise each year as a result of this policy.
We signed up to the Living Wage because we wanted to. We believed it was the right thing to do but in hindsight it had a profound impact in ways we had not envisaged.
First of all, we were overwhelmed by the response of our colleagues. We expected those who received a pay rise to be pleased, what we hadn’t anticipated was how important this signal on fair pay would be to everyone else. It lifted spirits and improved everyone’s morale.
Secondly, the Living Wage became a symbol of everything we stood for. Such a clear and unambiguous statement about the company’s view on fairness, I believe, has helped build a stronger ethical business culture throughout the organisation.
I am writing this as we close out Living Wage Week. Once a year the Living Wage Movement, comprising now of 3,000 UK employers alongside a deep, interconnected and energetic civil society campaign, promotes the new Living Wage rate for the year ahead and celebrates those employers who have voluntarily signed up. It is a remarkable movement that has, truly, made a difference to the lives of thousands of low paid working people. What could be fairer than that?