OREANDA-NEWS. November 05, 2015. SSE, the UK's second largest energy supplier, has commissioned research measuring the ‘ripple effect’ of paying the Living Wage through its supply chain to contracted employees working regularly on its sites. 

Two years on from committing to the Living Wage, SSE found that by 2020 its supply chain will benefit five times more (800 full-time workers) than the company’s staff itself (158 workers).

KPMG found that by April 2016, approximately 400 full time equivalent employees, employed in SSE’s supply chain, will have received a pay rise.  Those that benefited in 2014/15 received an average pay rise of ?1,030 for the year.  

This number is expected to double to 800 full time employees by 2020 thanks to being part of a Living Wage accredited supply chain. 

The report comes ahead of next week’s announcement of a new Living Wage rate which currently stands at ?9.15/hour in London and ?7.85/hour for the rest of the country.

Alistair Phillips-Davies, SSE Chief Executive, said: “We were proud to be the biggest FTSE 100 Company to pay the Living Wage in 2013 which made an immediate impact on 158 of our employees. But we always knew we could have a far bigger impact and help more people out of the low pay trap through our supply chain. This is the first time we can fully measure that impact.

“The new research by KPMG demonstrates just how many people can expect to benefit as SSE fulfils its commitment to make sure every relevant contract awarded included a Living Wage Clause.  I hope other companies will sit up and take note of these numbers and see whether their companies could look at becoming Living Wage accredited too.”

All companies that become Living Wage employers not only make sure their own employees earn a wage they can live off but commit to ensuring that contracted employees on their sites earn it too. 

SSE’s ?2.2 billion supply chain covers the procurement of a wide range of goods and services from suppliers across a broad range of sectors, from manufacturers providing blades for turbines at its windfarms to cleaners providing services at construction site offices.  It’s been rolling out the Living Wage in its contracts and procurement process since April 2014.

Sarah Vero, Director of the Living Wage Foundation, said: “The Living Wage Foundation has always been clear – contracted employees must be covered by the Living Wage pledge made by accredited companies.  It would be too easy to pay directly employed staff a Living Wage – and contract out services like cleaning or catering.  

“We understand it can’t be implemented overnight but it is a condition of accreditation that contracted employees will benefit over time. SSE was the first big company with a complex supply chain to be accredited and I am delighted to see that so many additional working people will earn a wage rate that will take them out of poverty.”

Julia Unwin, Chief Executive of the Joseph Rowntree Foundation, said: “JRF firmly believes that the fight against poverty is not for Government alone. It can only be won if all parts of society contribute to this goal. 

“Paying the Living Wage can be good for businesses, for employees and for the wider economy. This research clearly shows the difference that large firms can make in an integrated, interdependent economy when they choose to adopt worker friendly policies.”

SSE commissioned KPMG to conduct the analysis to fully understand the number of employees that would benefit when the Living Wage is fully implemented across the supply chain (by end 2020) and the financial gain for the supplier employees benefiting in FY2014/15.

The Living Wage rate is set by the Living Wage Foundation and is calculated to reflect a ‘true’ cost of living in the UK. Unlike the national minimum wage, it takes into account the costs of housing, bills, food and work travel.

For full report see: www.sse.com/beingresponsible/reportinganddata