A fair day’s pay for a fair day’s work?

Jon Powell
Jon Powell

Minimum wage, living wage, CEO pay...a fair day’s pay for a fair day’s work?

The Chancellor recently announced the introduction of a National Living Wage. This isn’t going to replace the National Minimum Wage and isn’t on a par with the Living Wage, so what is it?

From April 2016 the National Living Wage (NLW) will apply but only to those aged 25 and over and will be set at £7.20, 50p more than the National Minimum Wage (NMW) for 25 year olds but less that the Living Wage (LW) recommended by the Living Wage Foundation of £8.25.

Assuming 233 working days of 8 hours that equates to an approximate salary of £12,500 on the NMW, £13,420 on the NLW or £15,378 on the LW.

So a 25 year old on the NLW will receive a salary of £13,420, but a 20 year old doing the same job would be salaried £9,880 (£5.30 hr on the NMW). And that doesn’t take into account the full cost to the employer e.g. NI, pension etc. The salary will be 36 per cent higher for the 25 year old. And don’t forget the employer cannot discriminate on (w)age and just employ the younger applicant.

So that begs the question of a fair days pay for a fair days work. Does the 25 year old doing the same job deserve a 36 per cent higher salary?

With all the confusion over what employers should legally pay their employees, what about the moral viewpoint?

Dan Prince, CEO of Seattle based tech company Gravity, announced earlier this year that he would raise the salary of every employee to $70,000 (£47,000) and cut his own salary to the same amount.

So if you are an employer that now has to pay more for the same “fair days’ work” or an employee that will benefit from an increase in salary as a result of the National Living Wage, do you feel any happier? Or are you still wondering how much your CEO is taking home and wishing you worked for Dan Prince…..