What you have to pay: minimum and living wage levels

Pay is a tricky issue. Employers have to balance what they can afford with what they need to pay to attract new recruits and keep people – as well as considering, if they’re wise, whether rates of pay are in line with what other employers are offering.

Keeping pay as low as possible can backfire. Unless you plan to only hire people who still live with their parents, you will have anxious workers worrying about how they can get by. There’s a high risk they will leave – perhaps having to move to other areas where rents are lower or to work for other employers who will pay more.

You then have extra costs for spending time recruiting and settling in new people, so paying a little extra would avoid that sometimes.

Plus there’s your image as an employer. If you’re paying the minimum wage – and the compulsory but lower levels for younger workers – then however wonderful your company is, your staff will just see you as a minimum wage employer and probably a temporary job.

Now it gets a little more complicated. The minimum wage was rebranded as the National Living Wage … even though there’s a different and voluntary “real” Living Wage. Let’s call the minimum wage the “compulsory” Living Wage for now and I’ll show you the pay differences, so you can work out which one fits with your salary levels.

The “real” Living Wage is a campaign encouraging employers to pay people an amount of money they will need to live and not just survive. With rising housing, energy, transport and food prices, anyone earning less than £8.75 per hour (£10.20 in London) may struggle.

If you’re not sure, that’s a salary of £17,000 – £18,200 depending on the length of your working week (based on 37-40 hours a week).

That compares with the “compulsory” Living Wage which is £7.50 per hour for anyone aged 25 or older, with lower pay rates for younger people. The rates will increase in April 2018.

Here’s a quick guide, based on a 7.5-hour working day:

A minimum wage salary means the employee less than £1,000 a month after tax deductions. With rents at £500 minimum for a room in a shared home Brighton, usually with £50-100 each month for bills on top, that means your worker loses half their pay at least on housing. However much they love their jobs, at some point the temptation to earn more money to live on will be too much.

If you’re already paying people more than £17,000 a year, then you’re already a “real” Living Wage employer. So why not tell people and get the credit for being a Living Wage employer?

Signing up at http://livingwagebrighton.co.uk/ only takes a minute. You can show everyone that you’re a great employer. You can get a logo to display on your website and be listed on the Brighton & Hove Living Wage’s website too.