London Living Wage: Yes, but when and how?

For the second time in the space of less than three months the Council’s leadership is making much of its commitment to the (eventual) implementation of the London Living Wage (LLW), not only for directly employed workers and agency staff working in the Council but for employees on outsourced contracts. These are mainly, though far from exclusively migrant workers, providing so-called ancillary services such as cleaning and catering, but also working in revenue generating functions such as parking enforcement.

Indeed, the Council is even literally flying the flag for the Living Wage Foundation above the Town Hall this month. Far be it from Camden UNISON to gainsay a small but significant step in the right direction. After all only a dozen or so councils across the country have moved towards some version of living wage, which in London currently stands at £8.30. But we certainly have the right, in fact the duty, to ask two immediate questions:

  • What took the Labour group so long, especially when compared with neighbouring Islington?, and
  • How much longer will it be until hundreds of workers on privatised contracts start to realise any gains from the policy decisions taken by the Labour Cabinet in July and then full Council in September 2012?

The Labour Party regained control of Camden Council in May 2010 on a manifesto that including a pledge to implement LLW across the board. Doubtless, there were caveats about its introduction at the time, but it seems astonishing that it has taken a Labour administration, with an explicit focus on reducing inequality, nearly two and a half years to adopt the relevant policy and even then with some important restrictions. Furthermore, the policy Camden has now adopted does not apply to existing but only future contracts, which will invariably be awarded after the current administration has completed its term of office. Crucially, the current position specifically excludes the social care sector where there is currently a race to the bottom in terms of pay and conditions both as a result of straightforward cuts and the impact of the ‘personalisation’ agenda introduced under the last Labour government. UNISON locally has to a degree managed to use the argument around the Council’s commitment to the LLW to put the brakes on rates falling below £8.30 an hour, but the reality remains that workers who have chosen to remain with social enterprise Housing 21 caring for dementia sufferers have seen their wages plummet by more than a quarter.

Meanwhile, since 2010, the Council has continued to award long-term contracts to major companies where the question of LLW received token consideration at best. The most glaring example must be the combined cleaning and maintenance agreement with the multinational ISS, which is set to run for a minimum of three years until 2015. In this case councillors effectively abdicated responsibility  for the workforce’s pay and conditions, delegating the power to award the contract to the Director of Finance. The vast majority of the cleaners now working for ISS are paid the legal rock bottom rate of the National Minimum Wage (NMW), recently uprated from £6.08 to £6.19 an hour. In the context of London, one of Europe’s most expensive cities, especially in terms of housing and transport cost, this can hardly be regarded as a wage affording what the vast majority of us would regard as decent standard of living in the western world in the 21st century. In fact, it is more than £2.10 – or 25% –  an hour below the level last set for the LLW in spring of last year (2011).

So with the Council’s current plans for implementing the LLW there is no prospect of pay improving appreciably for cleaners for at least another three years.  Worse still, however, the current contract awarded to ISS appears to be based on a reduction in cleaning standards and so has provided a convenient pretext for cutting labour costs through either axing cleaners’ jobs or cutting their weekly hours.

There is also the issue of annual ‘uplifts’ on outsourced contracts. The company concerned applies to the Council managers charged with overseeing the contract for an increase in the amount Camden pays to the contractor. The sum requested is roughly in line with the rise in consumer price inflation. We cannot be sure how tough the past negotiations have been over such requests, but the evidence suggests that the contractor receives a rise equal to or only slightly below its asking price. There is, however, no requirement on the private employer to pass on any of this money to its workforce aside from legally mandated increases in NMW. For example, during the lifetime of the Mitie cleaning contract (2006-2011) a substantial group of workers on slightly more than NMW but much less than LLW never received a penny extra on their hourly wage. More recently, the French-based multinational Veolia, which has Council contracts through 2017 for refuse collection, recycling and street cleansing, passed on only a part of its uplift to its workers in Camden, so after paying the equivalent of the then LLW (£7.85) in 2010 the company failed to keep pace with LLW, which means that the borough’s streetsweepers currently make around £8 an hour.

As noted above, LLW has not increased since the spring of last year, despite a pledge to uprate it annually. So the symbolic benchmark remains at £8.30 despite the rise in housing and transport costs in the capital outstripping any other region in Britain. Some credible research has already highlighted the fact that an increase in the number of workers receiving LLW would actually reduce the overall cost to taxpayers of benefits, which low-paid workers often have to claim simply to ensure a roof over their heads. The Living Wage Foundation itself has estimated that if the level of LLW reflected the impact of withdrawing means-tested benefits and tax credits, then it should already stand at £10.45 an hour.

Then there is the case of the parking enforcement contractor NSL, where in contrast to most outsourced contracts in Camden, UNISON has won recognition for the purpose of collective bargaining. As branch members are aware a bitter, protracted battle between our 160 or so members on the contract and NSL management has unfolded over the past few months. The company took over the contract with a reported value of £44.6 million under the previous Lib Dem/Toy partnership administration in 2009 and it’s due to run until 2016.

NSL only tabled something approaching a serious offer in early July in the hope of staving off a strike after an overwhelming ‘yes’ vote in a postal ballot and then withdrew that offer after workers rejected 10% over a three-year period on top of a current hourly rate of £8.09. (The company’s senior executive raked in nearly half a million in the last financial year). Since then the company has made an offer linked to the LLW for 2012 and the ensuing two years, which some councillors seem to think is more than acceptable, ignoring the context that the workers concerned help to generate million of pounds in revenue for the Council through penalty charge notices at the same time as confronting wind, rain and an often abusive motoring public.

Ultimately, the living wage must serve as only an underpinning for the lowest paid, a floor rather than a ceiling in terms of wages, if it is really going to act as a measure to alleviate the scourge of poverty pay and do something to erode the increasingly grotesque inequalities that characterise Britain’s economy today. UNISON’s view remains that privatised services should come back ‘in house’, but in the meantime rather than the taxpayer subsidising the cost to companies’ LLW increases, as currently appears to be the case in Camden’s vistion, the money should come out of corporate profits.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s