WAGES have been falling in Britain since 2007, once inflation is taken into account, making it harder and harder for workers to make ends meet. A legally enforced minimum wage, designed to prevent workers from being exploited, has been in existence since 1999. The current rate is £6.50 ($10.40) an hour.

But anti-poverty campaigners have been lobbying for something more ambitious—a “living wage”, which they calculate is the minimum necessary to meet housing, food and other basic needs. On November 3rd they announced that this rate (which firms are not obliged to pay) had increased from £7.65 to £7.85 an hour, and from £8.80 to £9.15 an hour in London.

Just 35,000 workers will benefit from the change, but campaigners are lobbying hard for more companies to adopt the concept. Royal Bank of Scotland has become the latest to do so, making it the 18th company in the FTSE 100 index to sign up, compared with just two in 2011.

Some of this change is the result of shareholder pressure. Barrie Stead, a retired solicitor, became concerned about the way companies were behaving back in 2011, and started to attend annual general meetings to ask whether they would adopt the living wage. “I’ve always had a chance to ask my question and been listened to respectfully,” he says. “I always say I’ll be back next year to see what progress has been made.” Sometimes he finds he has allies at the top. One director thanked him for raising the issue, as he had been arguing the case at his firm for three years but the board had not listened.

Mr Stead claims success at Legal & General, an insurance group, which adopted the idea in 2013 after his questioning; now he wants the group, one of Britain’s biggest shareholders, to lobby for the wage to be adopted by the companies it invests in.

Hermes is an investment manager with rather more clout than Mr Stead. It manages £27.4 billion of assets and lobbies for companies to adopt the living wage. Saker Nusseibeh, its chief executive, says businesses need to have a purpose on top of simply making money. And, he says, treating the workers well can be good for the company. “Paternalistic companies like the Quaker groups of Cadbury and Fry survived and prospered in the 19th century by treating their workers well.”

This is a key part of the campaigners’ argument. They say workers who are paid the living wage have better morale, making them more loyal and more productive. Barclays, a bank, found that its catering-staff retention increased from 54% to 77% following the introduction of the living wage, and its retention rate for cleaning staff rose from 35% to 92%.

KPMG, an accountancy firm, first adopted the concept in 2006 for its catering, cleaning and postroom staff; it says the annual costs of providing such services are £1m a year below the level when the project started. Higher wages were offset by reductions in recruitment costs, increased skills and productivity. Just paying higher wages is not enough, though; the nature of the job needs to change as well. “It is …good job design that brings dignity and meaning to work” says Zeynep Ton, a professor at the Massachusetts Institute of Technology. “When you design the work to ensure employees can be truly productive, customer service is better.”

Clearly, it is reasonably easy for companies to adopt the living wage if they have high margins and a low headcount; it will be more difficult for businesses with low margins and a large numbers of workers, such as supermarkets. Still, the idea is gaining ground.