Living wage in Wales 'could save £154m' says TUC

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Media captionAbout 250,000 people in Wales earn less than the living wage

Paying every worker in Wales a "living wage" would save £154m annually through reduced benefit payments and increased taxes, the Wales TUC has claimed.

It has called for all companies "that can afford it" to pay £7.45 an hour, which is higher than the legal minimum.

Across the UK, the TUC estimates HM Treasury would save £3.3bn.

The Federation of Small Businesses (FSB) Wales, said the TUC's figures were "wide of the mark" and said many businesses could not afford it.

The living wage, promoted by the Living Wage Foundation is an informal benchmark based on the amount an individual needs to earn to cover the basic costs of living.

It is set at £8.55 an hour in London and £7.45 an hour in the rest of the UK.

It is not legally enforceable, unlike the national minimum wage - which is £6.31 an hour for adults and £5.03 for people aged 18 to 21 - but nearly 300 employers pay it.

Recent research for accountants KPMG suggested that one in five people in the UK is paid less than the living wage, with the proportion being much higher among waiters and bar staff.

About 250,000 people in Wales earn less than the living wage.

The TUC wants "employers who can afford to pay the living wage to take action now to tackle the shocking rise in in-work poverty across Wales".

Wales TUC president David Evans said: "Low pay costs every single one of us.

"Some large companies are getting away with underpaying their staff as means tested benefits and tax credits top up incomes, that still leave thousands of working families below the poverty line.

"Good employers continue to be undercut by bad ones and now more than ever, workers across Wales need a pay rise."

The union has not called for the living wage to be legally enforced, but has called for all companies to pay more than the minimum wage.

Mr Evans added: "The savings we've identified through the tax and benefits system are only made to the UK Treasury so this is another example of the need for the UK government to stop under-funding Wales.

"If the UK government is serious about tackling the living standards crisis it should make a clear funding to commitment to help the devolved public sector in Wales offer better wages to its workforce."

'Cut hours'

Iestyn Davies, head of external affairs at FSB Wales, said many small businesses "would simply be unable to pay staff a wage that is 30% higher than the current minimum wage".

He added: "Sadly, the TUC's suggestion that if every employer were to pay the living wage in Wales it would make the Treasury £154m better off is wide of the mark.

"The calculation does not take into account the fact that some businesses would have little option other than to cut hours of employment to balance the books.

"A far higher mandatory hourly wage would also make taking on new staff less attractive to some employers, impacting on the tax take and, more importantly, the job creation that is so badly needed if we are to tackle youth unemployment and move people off benefits."

Lesley Griffiths, Welsh government minister for local government and government business, said: "In demonstrating our commitment to every worker in Wales, the Welsh government continues to support the concept of a living wage as a route to addressing some of the issues associated with low pay and income poverty."

HM Treasury has been asked to comment.

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