What if the living wage backfires in Oxford colleges?

Imagine that it’s April 2016. The government has just introduced its new national living wage (NLW) of £7.40 an hour. But, because that’s still below the £8.25 recommended by the Living Wage Foundation (LWF), Oxford colleges have bowed to the demands of student campaigners to adopt the latter. However, what should be cause for celebration turns out to be the opposite. The colleges’ wage budget just cannot stretch to cover the higher costs and they are forced to lay off employees. But this is not all. The colleges offset the higher costs by hiking battels, much to the fury of JCRs, who, in a comically ironic twist of fate, begin to protest the effects of the measures they campaigned for. The colleges are defiant, arguing that they gave the students what they asked for, which they did. Perhaps they cite the law of unintended consequences. Meanwhile there’s a cost to pay for the campaigners’ consciences and wallets.

Hopefully, this won’t happen. Colleges may find efficiency savings and discover that worker productivity increases as a result of higher wages to offset the bill. On the other hand, many large employers have voiced concerns about the living wage proposal. The boss of JD Wetherspoons said in September that the introduction of the NLW could cause pub closures in the least affluent areas of the country. The Financial Times recently reported that Next joined Costa and Morrison’s in voicing its concerns about the potential for the NLW to “backfire”, leading to “job losses, profit falls and price rises”. Tesco boss Dave Lewis has urged the Chancellor to rethink his policy, reported the New Statesman. Despite significant discontent among big business owners, small and medium enterprises seem even more worried. The Business Quarterly Magazine cites findings by the Federation of Small Businesses that 51 percent of owners predict that the proposed increase to at least £9 per hour by 2020 will harm their business. Just six percent feel that April’s mandatory increase will benefit their business.

Although two colleges and the University already have become Living Wage accredited employers, the overwhelming majority have not. Is this because they are of the same mind as the increasing number of small and large businesses who foresee pernicious impacts of the mandatory wage increase? If we allow ourselves the reasonable assumption that not all colleges and business owners in general are heartless and sadistic penny-pinchers, then they are most likely keen to pay their lowest paid staff more. There has to be something more than greed holding them back. In the face of substantial business opposition to both proposed living wages, it may turn out that wages cannot be arbitrarily raised without adverse effect. The Oxford University living wage campaign could force colleges to sack staff or pass costs onto students. As a sceptic might say, if it looks too good to be true, it probably is.

I, as much as anyone else, am in favour of higher wages for the low-paid, as long it does not threaten their job security, fellow employees, and the business. Nonetheless, if raising wages is not that simple, as swathes of business owners predict, I hope that living-wage campaigners are prepared to countenance the damage of their actions. Their pride, conscience, and wallets could take quite a hit if the changes they insist on backfire.

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