Building Fair Foundations

In 1879, the Cadbury brothers (George and Richard) purchased land less than six miles beyond what is now our Birmingham office. Their goal wasn’t simply to build a factory. It was to lay the groundwork for a vision.

Bournville was more than a workplace. It was a social contract made physical: dignified homes, open green spaces, and access to education, leisure, and healthcare. The Cadburys, as principled Quakers, believed that good business didn’t preclude good living. It demanded it.

Their belief was simple yet radical: work, wages, and welfare could and should coexist. Workers were paid not merely to survive, but to thrive. Without legislation compelling them, the Cadburys chose to view fair pay not as a cost but instead as an investment in people, in productivity, and in long-term prosperity.

 

The modern inheritor of a historic ethos

Fast forward nearly 150 years. The Real Living Wage (RLW) is the modern inheritor of that ethos.

Unlike the government’s National Living Wage (NLW) – pegged to a proportion of median earnings and filtered through employer affordability – the RLW is calculated by the Living Wage Foundation based on what people genuinely need to live, namely:

• Rent, bills, and food
• Transport and childcare
• Clothing and basic social participation

As of April 2025, the RLW stands at £12.60 per hour across the UK and £13.85 in London, representing an annual difference of £760 to £3,200 more than the statutory minimum. And yet around 4.5 million jobs in the UK (nearly one in six) fall below this threshold[1].

This isn’t just an economic issue. It’s a structural and ethical one.

 

The construction industry paradox

Public sector construction finds itself as part of this contradiction.

We work in an industry responsible delivering the UK’s essential infrastructure- schools, hospitals, homes, and transport systems. It is funded by public money and underpins public life. And yet, those who physically build these foundations are, in too many cases, denied the means to build stable, dignified lives of their own.

While robust, role-specific data on pay in construction is limited, the latest figures from the Annual Survey of Hours and Earnings (ASHE, 2024) expose a systemic problem. Across the sector, up to 10% of workers earn less than the UK Real Living Wage (RLW) of £12.60 per hour, with this figure rising to around 17% in London when measured against the capital’s higher RLW of £13.85.

The issue is particularly concentrated within specialised construction activities, a subsector employing over half a million people. Here, the lowest-paid workers earn as little as £11.95 per hour at the 10th percentile, placing a significant proportion below the RLW threshold. Casual labour and agency subcontracting deepen this vulnerability, especially where employment is precarious.

Among women in construction, the disparity is sharper still. Across all roles:

• 10th percentile earnings fall below the RLW (e.g., £11.54 in specialised trades),
• Median earnings for women stand at £16.08, compared to £18.51 for men- a persistent and measurable gender pay gap.

But this challenge isn’t only vertical, by role or gender: it is geographically entrenched.

In regions such as the North East, Wales, and the South West, construction wages trail national benchmarks. 10th percentile earnings in these areas all fall below £12.60, reflecting widespread in-work poverty. Even in London, where the median hourly rate surpasses £22, the lowest-paid 10% still earn just £12.00- well under the city’s RLW of £13.85.

The sector as a whole employs over 2.3 million people, roughly 6-7% of the UK workforce. But beneath this scale lies a precarious foundation: an estimated 36-44% of workers are self-employed, many without stable incomes or employment protections.

When such a significant share of the workforce is underpaid or insecure, the issue transcends individual hardship. It points to a deeper structural fragility. And when that fragility is embedded in a publicly funded sector, one tasked with building essential infrastructure, it becomes not just a policy concern, but a question of public ethics.

It is a structural failure: one that runs counter to the public good our industry is meant to deliver.

 

The hidden costs of low pay

When wages fall short of what’s needed to live, the cost doesn’t disappear: it migrates. It shows up elsewhere: in the stretched budgets of local authorities, increased pressure on the NHS, greater reliance on food banks, and rising welfare expenditure.

The effects are systemic and compounding:

• High staff turnover arises when workers leave in search of better pay. This disrupts continuity, increases recruitment and training costs, and drains institutional knowledge.
• Low morale and absenteeism often stem from financial stress. Workers struggling to meet basic needs are more likely to experience anxiety, burnout, and poor health- reducing focus, increasing mistakes, and driving up sick leave.
• Economic leakage occurs when low-paid workers rely on public services to close the gap. In effect, taxpayers absorb the shortfall created by employers through in-work benefits, housing support, and crisis aid.

From a fiscal perspective, this is deeply inefficient. From a social value lens, it’s a missed opportunity to create resilient communities. And from a human standpoint, it is indefensible.

 

Fair pay as the keystone of social value

The construction sector is no stranger to the rhetoric of responsibility. We speak often (and rightly so) about local employment, skills development and social value delivery. These are essential ambitions. But without fair pay, these initiatives are like building a house without foundations; impressive on first glances but lack the structural integrity to deliver lasting change.

Social value is not a checklist of disconnected actions. It’s an integrated system where fair wages are a cornerstone, the essential element upon which many other outcomes depend. Without this foundation, we risk creating communities that exclude the very people who built them.

 

Proof but also Challenges

Major contractors including Willmott Dixon, Laing O’Rourke, and Morgan Sindall have already implemented RLW policies, not only for their direct employees but through structured plans to bring supply chain partners into compliance. Similarly, Crossrail, working with Transport for London, historically mandated the RLW through all tiers of delivery.

While most white-collar consultancies and Tier 1 contractors already pay well above the Real Living Wage, making advocacy relatively straightforward for them- minimal cost impact with substantial reputational benefits- the broader picture is more complex.

Adopting the RLW as a universal baseline across the sector- especially for site-based roles- represents a significant shift. Without a coordinated, industry-wide action, it risks a cascade of unintended consequences. If imposed unevenly, RLW adoption could amplify existing structural pressures, particularly for SMEs and subcontractors further down the supply chain. For example:

• Margin squeeze and insolvency risk: Smaller firms, particularly those reliant on lower-paid labour, may be unable to absorb increased costs- especially with rising National Insurance contributions and material price volatility​. Without the ability to pass costs upstream, many face an increased risk of financial distress.
• Wage compression and skills pipeline erosion: Elevating the wage floor without proportionately adjusting pay across skill levels can compress wage differentials. This may demotivate skilled workers and reduce incentives for training and progression- particularly damaging for apprenticeship pathways already under strain​.
• Displacement, not improvement: There’s a risk that firms avoid RLW compliance not by raising standards, but by changing labour models- such as outsourcing, increased use of agency workers, or questionable self-employment practices- ultimately increasing precarity rather than reducing it​.
• Impact on training and recruitment: SMEs – who train two-thirds of construction apprentices- may reduce intake if costs rise dramatically, especially if apprentices are brought under RLW requirements too quickly​.

In short, without a sectoral strategy, good intentions could inadvertently risk market consolidation, reduced skills investment, and more fragile employment models.

 

The business case for the Real Living Wage

Despite these challenges, compelling commercial and strategic reasons support thoughtful, sector-wide RLW adoption:

• Improved productivity and retention: Living Wage employers consistently report reduced staff turnover, better morale, and lower absenteeism- with one employer noting a 25% drop in absenteeism after implementation. When workers earn enough to meet basic needs, they stay longer, perform better, and engage more fully.
• Brand and reputational value: In an ESG-conscious market, clients and investors increasingly favour firms that demonstrate social responsibility. Being a Living Wage employer is a visible, verifiable commitment that enhances public trust.
• Future workforce resilience: Paying fairly helps attract new entrants into the sector- particularly young workers- and supports retention of skilled labour in a tight market.
• Supply chain integrity: Embedding fair pay in procurement and contract requirements strengthens supply chain transparency, reduces compliance risk, and aligns delivery with social value goals.

The benefits extend beyond individual businesses. RLW adoption boosts local consumer demand- particularly among those with higher marginal propensity to spend- stimulating the economy while reducing pressure on public services through decreased reliance on in-work benefits and health interventions linked to financial stress.

Research suggests that extending the RLW across construction could inject £1.2 to £1.7 billion into the UK economy through increased consumer spending and reduced strain on public services.

The Real Living Wage isn’t merely a cost: it’s a value multiplier for individuals, businesses, and society.

 

Building momentum: roles and responsibilities

Making the step change to embed the RLW is not a solo endeavour. As Crossrail demonstrated, it will require collective leadership, cross-sector alignment, and a clear-eyed understanding that fair pay is not just a moral imperative – it is a systemic opportunity.

In the absence of statutory mandate, professional institutions, industry bodies, ALBs and delivery agencies have an opportunity to take a leading role, must help normalise, guide and scale the adoption of the RLW. Our recommendations include:

 

The Real Living Wage is not an “extra”. It is not an act of charity. Nor is it an inflationary indulgence.

It is a minimum viable threshold for dignity. A baseline for genuine value in “social value”. A signal that we are building not just assets but futures.

Let’s not just build buildings, let’s build a better industry and society. Betters, not just goods.

 

[1] This is based upon ONS data from April 2024: with 15.7% UK jobs paid below the real Living Wage in 2024, up from 1 in 8 (13%) in 2023.