Ethical Performance
inside intelligence for responsible business


Suppliers pressed on wages

March 2008

‘Living wage’ levels for 400 employees have been written into contracts issued to private sector companies by the Greater London Authority Group.

The GLA, which includes the Metropolitan Police, Transport for London, the London Fire Brigade, and the London Development Agency, is adding the stipulation to contracts worth £5.5million ($11m) a year as they come up for renewal, as part of a responsible procurement drive by London mayor Ken Livingstone.

No employee of the supplier companies affected may be paid less than the mayor’s ‘London living wage’ of £7.20 an hour – significantly above the £5.52 UK minimum for workers aged at least 22.

The London living wage level is decided by a special GLA unit that takes into account the cost of living in London and aims to provide ‘a secure margin to ensure that London employees do not fall into poverty as a result of unexpected expenses’.

Determining what constitutes a living wage has proved difficult for a number of companies and organizations working in the supply chain field, notably the Ethical Trading Initiative, which recently lost one member company, Levi Strauss, in an argument over the issue (EP8, issue 10, p5).

The GLA contracts in question have been signed in the first year of the responsible procurement drive, which is being introduced gradually. They cover only a fraction of the GLA’s £3billion annual purchases of goods and services, but a GLA-commissioned review last month concluded that good progress was being made on this and other aspects of ethical procurement, with the Metropolitan Police Service alone having awarded £60m worth of facilities management contracts that take into account suppliers’ sustainability practices.

Apart from the living wage, the GLA’s responsible procurement policy covers supplier diversity, training, community benefits, and ethical sourcing by suppliers themselves. The mayor plans to make sure that the procurement criteria are applied when purchasing goods and services for the 2012 London Olympics.

Greater London Authority Group | UK & NI Ireland | Working Conditions

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