“Living Wage increases can no longer be absorbed” warns Danhouse Security md

Managing agents responsible for multi-tenanted buildings have a vital role to play in better promoting the value of security officers to their tenants and why any increases are justified.

“If the tenants see the value of the officers on the front desk and securing their offices at night,” asserted Fitzpatrick, “then it becomes easier for them to agree to any additional costs their agent may wish to charge.”

Fitzpatrick continued: “The challenge with the London Living Wage is that it typically applies to employees working in service industries where the margins are already very thin. This means absorbing an increase is simply not feasible if that business wants to remain competitive. The costs must be passed on in cases where an erosion of margin is simply not an option.”

Good for business

The real Living Wage is now set at £13.15 per hour for workers in London. Organisations like Danhouse Security recognise that it’s good for business. “We know it helps in retaining our existing team members as well as attracting new talent,” stated Fitzpatrick. “We also know it’s important in winning new business, especially so when it comes to navigating the procurement process.”

Since the Living Wage was first introduced, the guideline amount has steadily risen to consider inflation and an increased cost of living. Since 2016, the Living Wage has, in fact, increased by 40%.

At the end of October 2023, the amount was raised again by a further 10% from £11.95 to its current level of £13.15, giving employers until 1 May this year to implement the changes required. It’s £2.73 more per hour than the Government’s National Living Wage (which was also increased by 10%) and higher than the £12.00 voluntary real Living Wage (which applies to UK businesses outside of London). The rate in the capital is designed to reflect the higher costs faced by those living and working in Greater London.

Some high-profile businesses including Capita have now dropped their commitment to the real Living Wage, expressing concerns in relation to future affordability. Fitzpatrick affirmed: “Even supporters of the Lving Wage concede that the rises have been difficult to absorb, but also adopt the view that there’s no point in signing up to the scheme if only to instantly withdraw once it becomes too rich to accommodate.”

Further, Fitzpatrick observed: “This is a familiar argument forthose of us who’ve spent the last 30 years or so in the security guarding industry. The service providers want to pay their officers well, but there’s only so far they can go and how much their clients are willing to concede in their tenders.”

Smart clients

Fitzpatrick outlined that, some time ago, the smart clients recognised the value of a supplier who pays its officers well as this is ultimately reflected in the quality of service they receive on the ground.

“They recognise the practical benefits of having an experienced, motivated and consistent team protecting their buildings, their people and their assets and are prepared to pay for that consistency. That can only go so far, though. It remains the case that the value of a security officer needs to be more widely promoted and understood.”

In multi-tenanted buildings, since the cost allocation is typically pro rata of the space that’s occupied, Fitzpatrick feels that a fair way needs to be found in terms of distributing the costs accordingly. “There are challenges, too, for the agents and service providers alike. Fixed contracts don’t always allow for accommodating pay increases they cannot predict, while agents themselves cannot always afford a price hike in one go.”

Continuing this theme, Fitzpatrick concluded: “Flexibility is therefore key. It’s about working through the challenge with clients to implement the changes over time. This enables organisations like ourselves to honour the spirit of The Living Wage Foundation’s mission and, ultimately, to ensure security officers are paid a fair wage for the essential service they provide on a daily basis.”

*Further information is available online at www.danhouse.co.uk