Living Wage and reputation: has the discussion changed?

alva analysed the reputational impact of the Living Wage before and immediately after George Osborne’s July Budget announcement in which he introduced a National Living Wage. Two months later, companies including IKEA, Oliver Bonas and Lidl have become Living Wage Foundation accredited employers. But several other corporations have spoken out against the potential impact the mandatory pay rate will have on prices, recruitment and growth.

It seems that the debate around the Living Wage is far from over. What conclusions can we draw about where the debate stands today, and how it might continue to impact corporate reputation?

Before the National Living Wage

Prior to George Osborne’s Budget announcement, Living Wage Foundation accreditation contributed limited positivity to overall company reputation.

• Living Wage coverage generated the most impactful positivity when a company was the first in its sector to commit and when this commitment was aligned with the current political climate
• And Living Wage content negatively impacted corporate reputation when a company failed to live up to historical wage commitments

IKEA Living Wage coverage

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Immediately after the National Living Wage

Immediately following the Budget announcement, previously accredited first mover companies including Burberry, Nestle and Nationwide were cited in coverage of IKEA’s Living Wage commitment. IKEA, the first company to commit to the Living Wage Foundation’s higher pay rates after Osborne introduced a National Living Wage, earned initial positivity as a company genuinely committed to living wages. Coverage of IKEA’s Living Wage commitment in the first two days of coverage was 97% positive.

Two months later…

In the past two months, Oliver Bonas and Lidl have been the most visible companies to have become accredited by the Living Wage Foundation. While they sought to differentiate themselves as companies putting staff first, other businesses and industry bodies warned of dangerous knock-on effects.

There are three key takeaways from the last two months and the way the discussion around the Living Wage has developed:

1. The reputations of first mover companies are likely to continue to benefit the most from Living Wage commitments. Previously accredited first-mover companies including SSE, Burberry and Nestle were consistently referenced when a new company committed to the Living Wage. And both Oliver Bonas and Lidl amplified reputational positivity by being recognised as first movers within the high street retail and supermarket sectors.
2. The influence of the Living Wage Foundation and its director Rhys Moore seems to be waning, as the focus of discussions around the Living Wage shifts from comparisons between the NLW and LWF pay rate to the impact Living Wage accreditation has in differentiating a company from others within its sector. IKEA’s accreditation focused on the fact that the company had chosen to become accredited with a “genuine” Living Wage – the higher one promoted by the LWF. After Lidl’s announcement in mid-September, however, conversation focused on the payment of the Living Wage as a “new frontier in the supermarket war”. At the time of IKEA’s accreditation, Rhys Moore was referenced in 8% of coverage. At the time of Lidl’s accreditation, he was only mentioned in 1%. At the time of IKEA’s accreditation, 8% of content mentioned the “real” or “genuine” Living Wage, while this language was only used in 3% of coverage related to Lidl’s accreditation.                                                                                                                                                                                                                                                                                                                               ­­                                                                       ­
3. Companies that spoke out against Osborne’s National Living Wage haven’t suffered reputational damage. Companies including JD Wetherspoon and Next have spoken out against the National Living Wage as a measure that could hurt UK businesses, raise prices and curtail recruitment. Negativity in the majority of this content is focused on George Osborne and the Government, not the businesses that question the NLW.

So what does this mean for your business?

If your company is considering paying staff a Living Wage, you will gain the most reputational positivity if you are a sector first mover. In your announcement, a focus on paying the “real” Living Wage as opposed to that mandated by George Osborne won’t generate as much positivity now as it did immediately after the announcement. And if your position is simply one against Osborne’s NLW, you’d be best advised to couch your arguments in concern for UK business, prices for consumers and the potential impact on future employment to avoid negative coverage.