Scotland needs a pay rise and the living wage is one way of achieving it

Scottish Living Wage Week is an opportunity to focus on expanding the scope of the living wage across Scotland.

Today has seen a welcome increase in the living wage rate to £7.65 (outside London). In comparison the adult minimum wage rate is £6.31 an hour.

The Scottish Living Wage is good news for workers as they get higher wages that also improves health and job motivation. It’s good for employers because it reduces turnover, improves productivity and attracts better staff through reputational gain. The wider community benefits through lower benefit cost, less stress on the NHS and cash into the local economy.

The Institute of Fiscal studies has calculated sub-living wage employers cost the taxpayer £6bn a year in in-work benefits alone. The indirect cost on poverty is around £25bn a year. A new report for UNISON by Landman Economics looks at the economic benefits and calculates that 58,000 additional jobs across the UK could be created by the stimulus impact of the living wage. This shows that the living wage is an economic win-win, strengthening the case for making it a statutory provision.

Almost all the public sector in Scotland is now committed to paying the Scottish Living Wage with less than 3% of the workforce not covered. The challenge is to extend the scope to more parts of the voluntary and private sector. The Scottish Government has agreed to financially support a project to extend accreditation and this is very welcome. A field worker should be able to explain the benefits to a wider range of employers and help them achieve accreditation.

However, the key next step is to promote the Scottish Living Wage outwith the public sector through procurement. The Procurement Reform Bill recently introduced into the Scottish Parliament should include a requirement that all contracting authorities stipulate payment of the Scottish Living Wage as a condition for performance of the contract. In addition, there should be a Code of Practice for the promotion of the Living Wage in procurement, giving guidance on the legal position, good practice, uprating, accreditation, s52 statutory guidance and the PPP protocol on the two tier workforce. The Scottish Living Wage Campaign and the STUC will be lobbying the Scottish Parliament on Thursday, November 7, calling for changes to public sector procurement.

For those who argue that companies can’t afford the living wage, think again. Figures from the Office for National Statistics (ONS) show that the UK’s biggest companies increased their cash reserves by £83bn between 2007 and 2012. But some employers are refusing to use this cash to offer decent wage rises that would increase demand in the economy. Instead, workers are suffering the longest wage squeeze in over a century and in-work poverty continues to grow. Ed Miliband is even proposing tax breaks for companies that pay the living wage, opening up the prospect of making it even more affordable.

Fair pay is by far the most effective way to tackle the cost of living crisis and make work pay. Scotland and the UK need a pay rise and extending the living wage is an important way to achieve it.