WHEN someone asks whether an employer pays a living wage, they could mean one of at least three things.

There is the loose term “living wage” that we use in conversation.

There is the National Living Wage announced by then-chancellor George Osborne last year – effectively a boost to the National Minimum Wage.

And then there is the Living Wage as set by the Living Wage Commission, which encourages employers to commit to an independently-set hourly rate.

Martin Hancock, chief executive of Bournemouth-based housing organisation BCHA, is among the employers which have signed up to the voluntary wage – currently £8.25 an hour outside London.

“It’s quite a commitment you make,” he says.

“It’s not just about paying the wage, it’s about looking to apply it to the contracts you go into. They give you about three years to do that. If you use subcontractors then within three years you have to make sure they’re evidencing that they’re paying a fair wage.”

George Osborne’s National Living Wage applies to people aged 25 and over and stands at £7.20 an hour. He intended it to rise to £9 by 2020.

The voluntary Living Wage, meanwhile, is set by the Living Wage Foundation, and the rate outside London is calculated by the Centre for Social Research.

Employers committing to the scheme know the wage is reviewed independently every year.

BCHA employs around 450 people – around 330 full time equivalents – across the south. It turned out that only around 20 staff were owed a rise from the change in policy, but many more could be affected through subcontractors in its the supply chain.

Mr Hancock said the policy seemed right for an organisation that is well aware how unaffordable housing can be locally.

“If you work at the Minimum Wage, you end up with about £14,000 a year for a 37-hour contract. After tax you’ll end up with under £1,100 a month. If you’re single you won’t end up with many benefits on top of that,” he says.

“One-bedroom flats are £600-£650 a month.

“A lot of jobs in Bournemouth re going to be on lower wages so you think about how we can we do our little bit to just say we’re helping people.”

He says BCHA researched the issue before making a presentation to its board about the Living Wage. “They needed to be aware of the consequences of what we were committed to. We want through a process of consideration,” he says.

“We thought it was the right thing to do in conjunction with our vision and mission – and I think it was also about the whole austerity agenda and the effect on some of the more vulnerable groups through the benefits system that we felt was unfair,” he adds.

One of the possible objections to a living wage is about the pressure to preserve “differentials” – that is, to boost the pay of people further up the pay scale so they still enjoy the same advantage over their colleagues.

“We didn’t have too much of that,” says Mr Hancock.

“I would put that down to the fact that we have a lot of committed staff. I think a lot of staff recognised that they’re working with people who they’re helping to move on into a form of independence.”

He adds: “We want to live in a good society and recognise we all have different skills. I think it’s healthy to integrate with a whole cross-section of society.”

Supporters of the Living Wage say it makes business sense. Low-paying businesses see higher staff turnover and absenteeism, lower standards and weak productivity, they argue.

Mr Hancock points out that as more employers sign up to the idea, businesses will need to become Living Wage employers to compete for contracts.

“Isn’t the challenge to be creative and innovative as an employer, to constantly challenge and improve?” he says.

“Why not see the Living Wage Foundation a something to work towards over a short period of time?”

PANEL: Minimum, Living and National Living Wages

The National Living Wage was announced by George Osborne last summer. Since April this year, it has stood at £7.20 an hour – but does not apply to first year apprentices and under-25s.

Mr Osborne intended it to rise to £9 by 2020, ensuring the low-paid earned at least 60 per cent of median earnings by then.

It is effectively a boost to the National Minimum Wage, which still applies to under-25s.

The Living Wage as set by the Living Wage Foundation is a voluntary pay rate. It currently stands at £8.25 outside London and £9.40 in the capital. It is set annually by the Living Wage Foundation and calculated by the Centre for Social Research.