In the 1770s, economist Adam Smith examined how to improve human welfare in a series of Glasgow lectures that culminated in his influential book The Wealth of Nations. Over 300 years later, the inequality Smith decried remains, with many in work still struggling in poverty. Smith argued that “no society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.” Today, however, work is often not a reliable route out of poverty, and low-wage work fails both workers and organisations.

For organisations, relying on low wages is a false economy. Low pay reduces staff loyalty and engagement, increases turnover, and incurs hidden costs like advertising, training, and the loss of experienced staff. Low-wage employers remain employers of last resort, with disengaged staff providing only basic customer service and keeping ideas for improvement to themselves, adding further costs and potential reputational damage.

Employees generally seek work that offers a living wage, job security, predictable hours, and opportunities for advancement. They also value employers who understand and support their personal challenges. Organisations that invest in decent work and employee engagement are better able to attract and retain talent, making them more resilient and successful in the long run.

In these organisations, line managers can focus on building team skills and supporting staff, rather than constantly dealing with turnover. Engaged staff are more likely to raise issues early, helping the organisation to improve service quality and reduce costs. As a result, resilient organisations retain experienced staff at all levels, creating a stronger workforce.

Read the full blog on the Living Wage Scotland website. 

First published: 5 November 2024

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