Investors back call for largest listed UK companies to provide cost-of-living support to low paid

by | Nov 25, 2022

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 CCLA Investment Management today announced that its recent outreach to 100 of the UK’s largest listed employers to enquire about the support being provided to their lowest-paid workers during the cost-of-living crisis, has now received the backing of 15 other investors including Aviva Investors, Brunel Pension Partnership, Joseph Rowntree Foundation, Legal & General Investment Management and Trust for London.

The 16-strong investor coalition with £3.2 trillion AUM, has come together to sign a joint investor statement derived from CCLA and Church Investors Group’s original letter, urging companies to:

  • Prioritise providing support for the lowest paid employees including uplifting pay and the provision of one-off cost of living support
  • To consider meeting the new real Living Wage rates
  • Work in good faith with workers and unions to reach agreements on pay claims and avoid potential disruption
  • Proactively engage with third-party contractors to ensure support is being provided for staff working on the company’s premises
  • Be cognisant of pricing of key goods and services upon which people are reliant

Mr Peter HUGH SMITH, CCLA Chief Executive said:

“The scale of the cost-of-living crisis in the UK is unprecedented and with no end in sight. Millions of working people are facing a very hard winter and UK businesses should be vigilant in ensuring that their lowest paid are protected through the winter months. The idea that there are employed people who do not earn enough to support themselves, to eat healthily and have a safe and warm environment in which to live, is morally wrong and financially unsustainable;. While we appreciate there are many pressures on companies, it is absolutely imperative that they do more to support their lowest-paid workers. Healthy financial markets depend on healthy communities that can afford to purchase the everyday products and services businesses produce. We are pleased to see other investors add their voice to this important engagement to improve the livelihoods of the lowest paid and to push for a more sustainable and inclusive society.”

The initial outreach by CCLA, together with the Church Investors Group, was completed in September and has to date produced 58 responses from the 100 companies which received letters. Ten of these responses are ‘holding’ responses and 48 responses are substantive.

Dr Martin BUTTLE, CCLA’s Better Work Lead said:

“While companies clearly recognise the scale of the cost-of-living crisis, it is evident that the vast majority of companies are not taking sufficient measures to protect their low-paid workers and third-party contractors working at their company sites. While the responses vary significantly, no company had, in our opinion, a robust enough response to the crisis and unfortunately, it was in companies that have a high proportion of low-paid staff, such as food production, hospitality and retail, where the support described was weakest.”

Summary of the responses

  • Only 25 companies confirmed that they are accredited real Living Wage employers
  • 6 companies stated that they benchmark wages against the real Living Wage but are not accredited
  • A number of companies stated they had provided their employees with an uplift in pay but it was not clear whether this was in response to the crisis or was part of their annual pay review.
    • In at least one case, despite a significant increase, one company’s level of pay for its low-paid workers still remained below the real Living Wage.
    • In another case, Natwest Group decided to make a permanent 4% (average £1,000) increase to pay for those earning under £32,000.
  • 21 companies referred to one-off payments and discretionary annual bonuses of between £500 to £1500 targeted to the lowest-paid staff. Banks seemed to be providing the broadest response with HSBC providing one-off bonuses to 17,000 staff and Lloyds Banking Group providing bonuses to 63,000 staff.
  • Ten confirmed that the support provided to employees, extended to third party contractors however, that support was not defined.
    • A further eleven did not mention third-party contractors but are required by virtue of the real Living Wage accreditation to ensure that third-party contractors are paid the real Living Wage.
  • Additionally, 10 companies referred to support for other businesses, charities and communities in their wider ecosystem.

A number of companies referred to their existing benefits packages:

  • 26 businesses stressed they provided a broad package of benefits including discounts for employees at other businesses.
  • 38 businesses mentioned they had employee assistance programmes that provided support such as mental health hotlines and training of financial management and debt counselling.
  • 14 businesses referred to collective bargaining agreements and ongoing negotiations with unions as well as work councils and other formal social dialogue mechanisms.
  • Seven mentioned that they had specific hardship funds and grants which employees and, in some cases, former employees could access.

CCLA will write again to the list of 100 companies in March 2023 to ask for an update and to monitor progress made.

Mr Peter HUGH SMITH, CCLA Chief Executive concluded:

“We have written to 100 of the largest employers in the UK and received substantive responses from less than 50%. Those that responded collectively employ 3.5 million people and have a combined market capitalisation of £1.4 trillion. The overall percentage of those that have indicated they are providing extra measures of support for their own low-paid employees is astonishingly low. We really have to ask the question: Why aren’t they doing more? At CCLA we believe that all companies should pay the real Living Wage as a minimum. We will be updating our voting guidelines next year and for those companies that fall short in protecting their lowest-paid workers from the crisis, we will not vote in support of increases in executive pay.”

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