Let's be bolder on tackling poverty pay during Living Wage Week

During Living Wage Week we should focus on ensuring that the 400,000 workers in Scotland on poverty pay are paid the living wage.

The idea behind a living wage is very simple. A worker should be paid enough to live decently and to adequately provide for their family. It helps prevent in-work poverty and ensures workers are not exploited through low wages.

The Scottish Living Wage is good news for workers as they get higher wages that also improves their 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.

This year’s Living Wage Week got off to a good start with a 20p increase in the rate to £7.85. That means a much needed pay rise for those on the living wage. That includes most of the public sector in Scotland and a growing number of private sector employers who have signed up voluntarily. The energy company SSE has been a champion of the living wage in Scotland this year and they have been joined by high profile firms including Nationwide and Heart of Midlothian Football Club. Celtic have yet to follow, but there is a great grass roots campaign pressing them at every opportunity.

Of course its women who are the main victims of poverty pay. Today is Equal Pay Day, marking the point at which women working full-time effectively stop earning as they are paid £5,200 (15.7%) less per year, on average, than men working full-time. Equal Pay Day for women working part-time was way back on 28 August. Research published last week by the World Economic Forum revealed that the UK has fallen out of the top 20 most gender-equal countries in the world for the first time after women’s incomes fell by £2,700 over the past year. The UK is now behind Nicaragua, Bulgaria and Burundi for women having an equal chance of a good education, career and health. And it’s not just women. Young workers, part-timers and black workers are all more likely to be on poverty pay.

The Scottish Government is to be commended for including the Scottish Living Wage in their pay policy and for supporting the Scottish Living Wage accreditation initiative. However, it is through procurement that they could do much more to extend the scope of the living wage in Scotland. Promises were made during the passage of the Procurement (S) Act that have not been delivered. Our experience on the ground shows that public bodies are not even abiding by the current rules - so we need to get a move on with developing the statutory guidance. In this briefing I set out how we could make progress now.

Labour also needs to be more radical. Ed Miliband’s plan to raise the National Minimum Wage (NMW) to £8 by 2020, won’t do a lot for workers below the living wage after you take into account rising inflation. UNISON and others, in submissions to the Smith Commission, have argued for the devolution of labour regulation including the NMW.

 

Scottish Labour, under a Leader like Neil Findlay, could be much bolder. Helping families out of poverty and saving the taxpayer from subsidising bad employers.