In a controversial move, Capita has joined the ranks of employers withdrawing from the Real Living Wage scheme, citing significant annual increases as the primary reason for its decision. This decision has raised eyebrows and prompted the Communication Workers' Union (CWU) to consider industrial action, highlighting the potential impact on hard-working employees during an already challenging cost-of-living crisis.
Capita - a prominent outsourcing company - expressed reluctance in withdrawing from the Real Living Wage scheme after facing a second consecutive substantial annual increase. The company argued that employees currently receiving the Real Living Wage, recommended by the Living Wage Foundation and adjusted to reflect the cost of living, would still earn more than the upcoming national living wage of £11.44 in April. They also assured that employees working on contracts obliging the organisation to pay the Real Living Wage would continue to receive the stipulated rate.
Whilst the company emphasized its commitment to its people and hinted at a possible future re-evaluation of the decision - framing it as part of an ongoing review of the company's cost base - the estimated impact on employees is substantial, with most workers potentially losing around £850 a year due to their withdrawal from the Real Living Wage scheme. This financial setback comes despite Capita reporting a profit of £33.1 million in 2023 and its CEO Jon Lewis and CFO Tim Weller earning a combined total of £2.92 million during the same period.
The CWU, representing Capita workers on contracts with BBC, Virgin Media O2 and Tesco Mobile, expressed its astonishment at Capita's decision. The union announced plans to consult its members about balloting for industrial action, citing the potential harm to employees' living standards during what they deemed the worst cost-of-living crisis of the century.
The Living Wage Foundation, disappointed by Capita's decision, emphasized the importance of the independently calculated Real Living Wage, which is voluntarily paid by over 14,000 organisations. Despite economic challenges, the foundation highlighted the continued growth of businesses joining the movement, with over 3,000 new accreditations in 2023 alone.
Capita's decision follows closely on the heels of BrewDog's withdrawal from the Living Wage scheme, citing the need to make "hard decisions" after a trading loss in 2023. Both cases underscore the challenges faced by businesses in balancing financial considerations and their commitment to fair wages.
