Work and Pay

Enlightened self-interest? The role of private sector employers in reducing poverty

  • Published 22nd Mar 2016
  • Authors: Ceri Hughes, , Peter Kenway, , Peter Kelly , , Theo Barry Born,
  • Category: Work and Pay

There is increasing recognition that businesses across Scotland have a role to play in addressing poverty. Such a role is explicit in the Scottish Government’s Economic Strategy, and is also integral to the Fair Work agenda.

But while there is a clear rationale for talking to employers about poverty, and for seeking to engage them in initiatives to tackle poverty, it remains unclear how businesses themselves see their role in tackling poverty, and what the factors are that determine business engagement in anti-poverty activities.

This research project, undertaken by the New Policy Institute and the Poverty Alliance, set out to understand why employers engage in initiatives like the Living Wage. Based on in-depth interviews, the research explored their motivations and what this may mean for efforts to create a fairer economy and tackle in-work poverty.

The research was supported by the Scottish Government and SSE plc.

Key findings

  • Employers clearly have a role to play in tackling poverty. There were 390,000 children and adults in in-work poverty in Scotland over the three years to 2013/14. Of this 390,000, 170,000 (44%) were working-age employees, 9% of the total number of employees in Scotland over the period.
  • Companies pay the Living Wage neither for altruistic nor narrow ‘business’ reasons. Rather, they do so on the basis of a wider sense of where their own interests lie. These can include: reputation, with regard to customers, clients and employees; the importance of exercising leadership; and an acceptance that community well-being is part of company well-being. It is by appealing to this ‘enlightened self-interest’ that Government can encourage employers to play a bigger role in addressing poverty.
  • If businesses are to play a bigger part in creating a fairer Scotland, they need a standard setting out how to avoid being a “poverty employer”