Living Wage Week

This is Living Wage Week, another opportunity to promote the benefits of the real living wage and fair work more widely.

The week traditionally starts with the announcement of the new Living Wage rates, which this year have increased to £9 per hour and £10.55 in London. The Resolution Foundation has published a briefing on how the rate was calculated this year. Wider inflation was obviously a key factor in the increase. In addition, some policy changes act as a downward pressure on the rates, for instance, the increase in the personal tax allowance and additional childcare support. Other policy changes create upward pressure including the ongoing freeze in working-age benefits.

I was at the Living Wage Expo at the Tynecastle Stadium in Edinburgh yesterday. Peter Kelly from the Poverty Alliance reminded the audience of how much progress had been made with the Scottish Living Wage - £216m into workers pockets, 34,000 workers getting a pay rise and more than 1300 accredited employers. We should also remember that many other workers have benefitted outwith accredited employers, due to procurement and collective bargaining.

It was good to see a public sector employer (even if they try to hide the fact!), Scottish Water Business Stream, getting the employee choice award. The nomination included a positive statement from a worker who explained what fair wages meant to them and how it changed their perception of the employer. 

This theme continued with a panel discussion involving Heart of Midlothian FC staff. They all described how the living wage meant they could afford what most of us regard as essentials, like holidays, transport etc. One young worker in the hospitality department highlighted the difference between £5.90 on the age-related minimum wage and £9 on the real living wage. The motivation of these workers was very apparent. Well done Hearts - time for other football clubs to follow!

The Minister for Business, Fair Work and Skills, Jamie Hepburn MSP set out the Scottish Government's aim of making Scotland a Fair Work nation. He rightly made the point that more equal societies do better on all tests, not just economically. He accepted that Scotland could do more as there are still one in five employees who are not yet receiving the living wage. I would point him to procurement, where policy has not always been matched by best practice.

The Outstanding Leadership Award went to Standard Life Aberdeen, who I would agree have been real private sector champions, not just with the living wage. They make the business case for the living wage, and in their sector, the wider benefits of trust and how it is a good measurement of company behaviour.

The living wage isn't just about big employers. One of the real successes of the living wage movement in Scotland has been the engagement from hundreds of small companies. Sarah Roberts from Healthy Nibbles is a good example of such a company and she set out the benefits for her firm and their workers. Importantly she emphasised the wider fair work agenda of her business. Other SMEs that have become accredited employers this year and were recognised in the awards as well.

As women are disproportionately represented in low pay workplaces, the living wage is also important in closing Scotland's gender pay gap. Anna Ritchie from Close the Gap pointed to the similarities in the business case for tackling the gender pay gap and the living wage.

Tess Lanning from the Living Wage Foundation reminded us that the living wage campaign started as a community campaign. This is something the campaign in Scotland is seeking to build on with the living wage place initiative. Including outsourced workers has also been important to the campaign, which has encouraged innovation in the workplace and extended the living wage beyond the core workforce. A good example is South Lanarkshire Council, who won the anchor institution award. They have increased the percentage of the workforce across the council area who are paid the living wage using the levers available to every local authority. I would also highlight North Ayrshire Council who were quick off the mark to commit to paying the new rate this week.

Dave Moxham from the STUC made the point that voluntary initiatives like the living wage are important in delivering real benefits to workers and promoting a different economic model. It supports the campaign for a higher statutory minimum wage and abolishing the age-related rates. Richard Leonard reiterated Scottish Labour’s commitment to a £10 per hour minimum wage this week.

Finally, I was very honoured to receive the Lifetime Achievement Award. It does seem like a lifetime since we kicked off the living wage campaign in Scotland, but actually, a lot has been achieved in a short time. Like others, I have burnt out a few PowerPoint projector bulbs pitching the case, but my role has often been to tear down fallacious legal barriers and find ways around EU and other procurement rules. There is still a lot to do, but the campaign is in good hands.

Living Wage - public sector leadership

The living wage movement is an international one. There are differences in context and approach, but the underlying principles are the same.

I have spent the last two days in Ontario, Canada, as a guest of Ontario's living wage movement to speak at their public sector leadership conference. They have a very active, community based living wage movement and they are keen to get the public sector more engaged in the campaign.

Colette Murphy from the Atkinson Foundation (plays a similar role to JRF in UK) made the case for public sector leadership because the public sector is powerful and can make a difference. She gave the City of Preston in England a mention, showing how the living wage led to the wider local economic regeneration that shadow chancellor John McDonnell has recently championed. She gave a range of examples of how various public sector leaders in Ontario had supported the living wage and other poverty reduction initiatives. This had led to statutory progress on wages and decent work.

The first panel included local government officials from Hamilton and Toronto who described what action they had taken on wages and poverty reduction, although still short of being an accredited employer. This included using procurement to ensure that they only did business with decent employers, creating a level playing field. Deanna Ogle, from Living Wage for Families, described the progress they were making in British Columbia, particularly since the election of a progressive government. Procurement is an important element of their strategy, including extending it into vulnerable sectors. All emphasised the importance of political and internal champions.

My presentation outlined the context for public sector engagement in the Scottish Living Wage and Fair Work. The focus of my presentation was on how the public sector can take the living wage forward through pay policy and encouragement including supporting accreditation. I set out in some detail how we changed the procurement rules to ensure the living wage reaches a wider workforce, particularly more vulnerable sectors like social care. 

After lunch, Melissa Cameron presented the findings of her Master's degree on the impact of the living wage. Detailed interviews with workers who benefited from the living wage showed life changing benefits in their lives. It also showed the wider public policy benefits to the local economy and health.

The next panel included three living wage employers who made the business case for the living wage, in three very different sectors. The common theme was that they had decided that the old race to the bottom model wasn't working and a new model, which included the living wage, was a better model. They made the usual arguments around productivity, turnover and reputational gain. However, they also evidenced the very clear values than ran through their approach - living the company mission statement. As one panellist put it, 'Businesses that don't stand for something, stand for nothing'. Key challenges included the importance of communicating effectively with all employees and winning trust. They also reported positive consumer and supplier responses, particularly with younger customers.

The final session was on how to influence the forthcoming provincial and municipal elections in Ontario. The focus of their campaign is to achieve a $15 minimum wage, but also to get the public sector to engage through procurement. They are building coalitions, planning campaign days, but also focusing on real people telling their stories. I particular liked the 'Adopt a Councillor' campaign, which built a relationship from policy commitment to implementation and beyond.

In the round up plenary it was obvious that there was a lot of energy in the campaign across Ontario. In a big geographical area there are obvious benefits in getting the local groups together to learn from each other. They obviously have some big political battles to fight, but they are certainly up for it!

Good progress on the Scottish Living Wage, but much more to be done

The Scottish Living Wage is the real living wage – the UK government just hijacked the brand!

The new rate of £8.45 is a welcome increase for many thousands of low paid workers. Also congratulations to public sector ferry operators Calmac, for their Scottish Living Wage Champions award.

The start of Living Wage Week is an opportunity to remind everyone that the real living wage is based on actual costs of living. While any increase in the national minimum wage is welcome, it remains a flawed approach - not least because the 'living wage' element only applies to the over 25's. Shops don't differentiate pricing for those under that age.

I was chairing a session at today's Living Wage Expo that highlighted the difference between the two approaches with experts from the Resolution Foundation and the Centre for Research in Social Policy. The ‘real’ Living Wage movement requires strong advocates who can offer clear differentiation against rates that are not based on cost-of-living. 

While there is a welcome cross party consensus on the real living wage, there is a more positive approach in Scotland. 

As First Minister Nicola Sturgeon said:

“For business, paying the Living Wage makes sense - it’s an investment in people and all the evidence shows it leads to increased productivity and reduced staff absence and turnover, while sending a strong signal to customers about fairness. Yet we also know around 20 per cent of Scotland’s workforce earn less than the Living Wage. With low pay one of the main drivers of in-work poverty, it’s vital that employers who can pay the real Living Wage do so."

The Scottish Government has made an important commitment to pay the living wage for adult care workers, even if the implementation has been partial and muddled. They should make a similar commitment for childcare workers, 80% of whom are paid below that level. The proposed voucher scheme won't deliver a well-trained and fairly paid workforce. Both of these sectors rely heavily on government funding and therefore government has the levers to make real progress on the living wage.

As TUC General Secretary Frances O’Grady said today:

 “The fight for decent pay won’t be won just by employer goodwill, however. We need strong unions who can negotiate with employers and win fair pay for their members, along with a rise in the government’s minimum wage."

Wages are also not the whole story. Bad employers cut other terms and conditions, like holidays and sick pay, to meet the statutory minimum wage. That's why the broader fair work approach in Scotland is so important. Again, the Scottish Government has taken a positive approach through the Fair Work Convention and the Labour Market Strategy. The challenge is to use the levers of government to deliver on the worthy ambition in these approaches.

Living Wage Week is an opportunity to promote the Scottish Living Wage. Today's conference heard some inspiring stories from workers and employers on the benefits for individuals and businesses. Scotland has made good progress, but there is much more to be done.

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.

Britain needs good jobs and a pay rise

Britain needs a pay rise, not just to bring relief to hard-pressed workers, but also to drive a sustainable economic recovery.

That’s the message from the latest research and is particularly relevant to our members in Scottish local government, who are being balloted on industrial action over pay from next week. Their pay is the lowest, even across the hard pressed public sector, as they are asked to keep public services going against all the odds.

A TUC study on the living wage showed that women earn just 66p for every pound earned by men working full-time (which is a pay gap of 34.2%). One of the main reasons for this huge gender pay divide is the large concentration of women doing low-paid, part-time work. This has led to a majority of women working part-time earning less than the living wage in over 50 local authority areas across Britain.

It’s no better for young workers. The proportion of workers aged 21 to 30 who are now classed as low paid has more than tripled over the past four decades, according to new research from the ResolutionFoundation.  Almost three in ten (29%) are now low paid, equating to almost 1.5 million young workers. In 1975, the proportion earning low pay was less than one in ten (8%). This also explains why many young people are locked out of the housing market, with just 3% of buyers in June aged between 18 and 30.

Missing out on the claimed economic recovery is not limited to these groups. The Poverty and Social Exclusion in the United Kingdom project has revealed that 800,000 Scots were too poor to participate in basic social activities, more than 400,000 adults do without essential clothing and almost one-third cannot afford to heat their homes adequately in the winter. The majority of children in poverty come from small families with at least one parent in work – so much for the UK government’s ‘strivers and shirkers’ analysis.

Across the UK, the percentage of households below what the public considered a minimum standard of living has risen from 14% to 33% over the last 30 years. This is despite the size of the economy doubling, indicating the gap between rich and poor is increasing.

Low incomes are also linked to underemployment. The TUC’s analysis of the latest labour market data shows that while unemployment has fallen by over 400,000 since early 2012, under-employment has risen by 93,000. And at 3.4 million the current level of under-employment is over a million higher (46%) than it was before the recession. It also highlights that the numbers who want more hours in their existing jobs means that under-employment is still increasing. In UNISON, we see this in sectors like care, with nominal hours contracts becoming more prevalent.

The answer to what some economists call the productivity puzzle is that we have too many low-pay, low-skill and low-productivity jobs in low-investment workplaces. We need to rebalance the economy with an emphasis on creating good jobs and promoting fair levels of pay for everyone – not just those at the top.

Public service workers in the front line of the attack on wages

Tomorrow, UNISON’s local government members in England, Wales and Northern Ireland will be going on strike, joining with other public sector workers in their effort to secure a decent pay rise. In Scotland, local government workers have voted for industrial action by two to one in a consultative ballot and will be considering the next stage of their own pay campaign later this month.

Matt Sykes, at the Touchstone blog sets out why public service workers are taking action. He argues that it’s a wider manifestation of the anger and frustration felt by public sector workers over pay and living standards. Industrial action is the inevitable consequence when you have a government that makes announcements over pay, rather than engage in a meaningful dialogue. The declaration that pay restraint will continue until 2018 is another example of this.

UNISON’s Heather Wakefield sets out the local government case at the Public Finance blog with a damning set of statistics on pay and the long-term impact on pensions. Again, there have been no real talks and the employers have refused to join the trade unions in independent arbitration.

The TUC has published figures that show how the UK government has frozen or limited pay increases to well below the cost of living. This has left local government and other public service workers on average £2,245 worse off in real terms since this government came into office.

Concern about the standard of living stretches into retirement. Research published by Aviva indicates that a fifth of people in Britain believe they will have to “work until they drop” because they cannot afford to retire. Money worries mean millions of over-40s are expecting to carry on working until they cannot physically continue. Others are concerned about paying their day-to-day bills without the regular income from employment coming in.

An important element of current pay claims is the Living Wage. The final report of the independent Living Wage Commission, chaired by the Archbishop of York, Dr John Sentamu says that the number of people on low pay in the UK can be slashed by over 1 million by 2020. The Commission warns that, if the government does not support the voluntary extension of coverage of the Living Wage, some working families will continue to rely on emergency measures, such as food banks and unsustainable debt, to get by. Currently 5.2 million people earn less than the Living Wage in the UK and the majority of people in poverty are now in working households.

This message is reinforced in the largest study of poverty ever conducted in the UK. The Poverty and Social Exclusion in the UK (PSE) project details how, over the last 30 years, the percentage of households living below society’s minimum standard of living has increased from 14% to 33% – despite the fact that the economy has doubled in size over the same period. These findings seriously undercut the UK government’s claim to be lifting people out of poverty through work. Cuts to welfare benefits add to the low pay misery.

The Joseph Rowntree Foundation’s annual Minimum Income Standard report looks at how much people have to earn taking into account family circumstances, the cost of essentials and changes to benefits. This shows that a lone parent with one child now needs to earn more than £27,100, up from £12,000 in 2008. A couple with two children need to earn more than £20,200 each, compared to £13,900 each in 2008. Single working-age people must now earn more than £16,200, up from £13,500 in 2008.

Public service workers are at the front line of the attack on wages, while this government awards handouts to the super rich. Tomorrow is just the start of a fight back to keep workers out of poverty.

Progress on the Scottish Living Wage and procurement

Progress with spreading the benefits of the Scottish Living Wage depends on a robust approach to public sector procurement.

The Procurement Reform Bill reaches its final stage in the Scottish Parliament next week and one of the most contentious issues has been the exclusion of the Scottish Living Wage. Labour's James Kelly MSP, who also led a separate debate on this issue, makes the case well in his recent Scotland on Sunday article. He is supported by a large civil society coalition who campaigned on this and other procurement issues.

In fairness to the Scottish Government, no one doubts their commitment to the Scottish Living Wage. Scotland leads the way in the UK with the implementation of the living wage across almost all the public sector. They have also funded an accreditation project that aims to encourage more private sector employers to adopt the living wage. The gap is procurement and this is largely due to the muddle and confusion over EU law.

The muddle is largely of their own making because they sent a very unwise letter seeking clarification from the EU Commission in 2012 that formed the basis for the current guidance. Daft letters tend to elicit daft answers and that is what they got. We had a perfectly straightforward statement from the Commission in 2009 setting out the way the living wage could be applied in procurement. That approach is supported by the counsel opinion we provided to the Committee considering the Bill. Only last week the EU Commission repeated their position, when they corrected another unwise speech from the First Minister blaming the EU for the problem.

Despite all this, I am pleased to say that we are now making some very real progress. The Deputy First Minister has tabled amendments to the Bill that does introduce the living wage for the first time. This approach gives public bodies legal clarity and a way of introducing the living wage into procurement. They will now be able to include the living wage in their procurement strategies in a way that will make it clear to contractors that, for relevant procurements, they will evaluate bids taking their employment policies including the living wage into account. That will then be included in the contract and can be enforced through contract performance.

This will be set out in more detail in the statutory guidance that public bodies 'must' take into account in relevant procurements. We have been given a very clear assurance from the DFM that the guidance will be robust, actively enforced and we will be involved in its drafting.

This is important because past experience has not always been positive in this regard. In particular, we already have the Local Government in Scotland Act s52 guidance that was supposed to end the two tier workforce. However, that has been poorly followed by many authorities. The irony is that if authorities properly applied s52 then the living wage would already be mandatory in public procurement. That's because the guidance covers not only new outsourcing, but also to a change of provider. As councils pay the living wage that should be specified in the contract now to avoid a two tier workforce.

Of course we still believe that the Scottish Government could go further and make the Scottish Living Wage mandatory. The legal basis is clear and the grounds for legal challenge minimal, not to mention unlikely for the reasons I set out to the Committee. But governments are cautious beasts when it comes to legislation and the DFM has promised to pursue the issue further with the EU Commission. Verbally this time!

The absence of a mandatory provision means that public bodies might not make the necessary changes to their procurement policies. The main issue here is cost and the key area is social care contracts. This is being addressed in other forums and progress on this issue is the next big step forward. We believe the costs are not massive and in any case the current arrangements are indefensible, as UNISON Scotland's 'Time to Care' report shows.

So not everything we would want, but very real progress and potential light at the end of this very long tunnel. The Scottish Living Wage makes a big contribution towards tackling in-work poverty and promoting sustained economic growth. Using Scotland's substantial public procurement spend will be a big step forward.

 

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Local action on ethical care

On World Social Work Day, Renfrewshire Council shows the way in the commissioning of homecare services by supporting the UNISON Ethical Care Charter.

I spent this morning in Paisley with our branch and Renfrewshire Council Leader Councillor Mark Macmillan and his colleagues, marking his commitment to supporting ethical care.

The Charter sets minimum standards to protect the dignity and quality of life for people who need homecare. It commits councils to buying homecare only from providers who give workers enough time, training and a living wage, so they can provide better quality care for thousands of service users who rely on it.

Talking to councillors at today’s event I was struck by the impact talking to home care staff had on their decision to take this initiative. The stories that our members told in our, ‘Scotland – It’sTime to Care’ report struck a chord with them. It reflected what their constituents had said and what they could see with their own eyes, watching home care delivered locally. Another councillor told me how a constituent had come to his surgery and told him just how much paying the Scottish Living Wage had meant to her family.

This initiative is a classic example of how we can use the power of public procurement to do so much more than simply buy goods and services. In this case, helping low paid workers, the people they care for and the local economy. Sadly, as the Scottish Government’s response to the Procurement Bill shows – they don’t yet fully understand this point.

We will be taking this message later this week to the Scottish Labour Party conference together with SHA Scotland. Shadow health minister, Neil Findlay MSP has been at the forefront in making the case for better home care and has also established a Quality Care Commission to look at longer term solutions. With a Labour council taking action locally, Scottish Labour is showing real leadership on this issue.

Why Britain needs a pay rise

Britain needs a pay rise and I set out why in an article in today’s Scotsman newspaper.

British workers have experienced the longest real wage pay squeeze since 1870. Inflation has risen faster than wages for almost 43 months. The share of the economy going on wages continues to decline. In the 1960s and 1970s, up to 61 per cent of the economy went on wages. Since the 1980s, it has never gone above 56 per cent. These small percentages make a big difference to our living standards. It is no coincidence that, for the first time, we have more in-work poverty than out-of-work poverty.

But while it is the rich who get the pleasure, there is more and more evidence that we are less and less willing to give the poor the blame. Opinion polls show strong support for a rise in the minimum wage, even among Tory voters. 

It’s also important for the local economy. Low paid workers in particular spend more of their earnings in local businesses. If Osborne was really interested in cutting the deficit, he might recognise that it’s the taxpayer that is subsidising bad employers through the welfare system.

I wrote the Scotsman article before Xmas. Since then there has been a flurry of new research supporting these arguments and in particular, highlighting the risk of creating another short lived debt fuelled economic ‘recovery’. I have summarised this in a post on our Public Works blog.

As I say in today’s article, it all comes down to the kind of country we want to live in. There is a better way and we need shout a lot louder about it in 2014.

Extracting more from public procurement

£11bn of public spending in scotland could do so much more than the timid Procurement Reform Bill envisages.

I was giving evidence today in the Scottish Parliament to the Infrastructure Committee on the Procurement Reform Bill. UNISON is supporting '10 Asks' from a broad based coalition of civil society organisations who believe we can get much greater community benefit from public procurement.

My focus was on raising employment standards by making the Scottish Living Wage a requirement  in contracts, so that we can spread the benefits into the private sector. In addition, contracts should end the forced use of zero or nominal hour contracts and strengthen training requirements.

I used care procurement as my real world example because it's a national disgrace. Low wages have turned the sector into the new retail, with many staff leaving as soon as they can get another job. Continuity of care is being abandoned in a race to the bottom. The use of zero hour contracts is having a similar workplace impact to blacklisting. Staff are less likely to report safety issues or even care abuse, because they worry that they will not be offered work after raising inconvenient issues with their managers. Far too many staff are also sent out to deal with complex care needs after only a few days training at best. Our elderly friends and relatives deserve better than this.

The Scottish Government has taken positive action to support the Scottish Living Wage, but they are hiding behind a misleading EU Commission letter on procurement. I set out in some detail why it is legal to make the living wage a contract performance clause with reference to counsel opinion. It is simply absurd to worry about a challenge under the Posted Workers Directive for low paid jobs. I suspect the Scottish Government is more concerned about the cost than tackling this issue.

Other weaknesses in the Bill include only partial action on tax dodging. Firms who take the public pound should pay taxes like the rest of us. This means aggressive tax avoidance as well as tax evasion. 

If the Procurement Reform Bill is to be anything more than a largely irrelevant housekeeping exercise, these are some of the issues the Committee will need to address. 

You can view the full evidence session on BBC Scotland Democracy Live.

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.

Scottish Living Wage Bill

I was in parliament this morning at a meeting to discuss John Park MSP's members Bill on the Scottish Living Wage. The main aims of the Bill are set out the consultation paper:

"The main objective of the Bill is to increase the number of workers in Scotland who are paid the Living Wage. This consultation seeks views on two approaches which could be pursued independently, in their own right, or together as a package, namely delivering the Living Wage through the public sector procurement processes, and/or by promoting the Living Wage so as to encourage employers, in all sectors, into paying their lowest paid workers the Living Wage."

I have previously dealt with the procurement aspects of the living wage. In my view this should be incorporated into the forthcoming Procurement Bill. The only blockage is the ill advised letter from Alex Neil MSP to the EU Commission. It is possible to get around this by legislating on different grounds as we have explained in our response to the Scottish Government consultation.

The second part of John Park's Bill is equally important and has perhaps received less attention.

"The general duty on Scottish Ministers to promote the Living Wage will be essential in providing the momentum needed to increase the number of people being paid the Living Wage."

This involves a strategic plan and reporting to Parliament following consultation with appropriate interests. This would not only put a political focus on the Scottish Living Wage, but it would also ensure it was consider by officials when drawing up other plans and proposals.

A key element of this is the creation of a Living Wage Unit. They would not only promote the issue internally would would be an important source of advice externally. For example, procurement is a complex area and public bodies need guidance and support in drawing up contracts. In addition the London experience shows that the benefits to the private sector can be promoted through a unit that can demonstrate a strong business case for the Scottish Living Wage. The best way to do this is probably to create a stand alone Commission reporting to Parliament together with some resource within the appropriate government department. That provides the necessary independence while ensuring that government gets the support it needs to ensure they actually deliver on the ministerial duty.

UNISON Scotland strongly supports this member's Bill and hopes it can attract cross party support. There has been good progress with the Scottish Living Wage in the public sector, much more than elsewhere in the UK. The next stage is to spread the social and economic benefits to the private and voluntary sectors. That is the main purpose of this excellent Bill.

Scottish Living Wage campaign

Today is the start of Living Wage Week. This opportunity to promote the Scottish Living Wage got off to a good start with the announcement that the current rate of £7.20 per hour is to rise to £7.45.

The Scottish Living Wage campaign supported by UNISON Scotland has a number of events planned for this week. There has been good political support as well with Ed Miliband's speech today. This follows yesterday's Observer piece by Dave Prentis and David Miliband. We also have an excellent Fair Wage campaign by the Scottish Youth Parliament.

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.
In contrast the cost to employers is minimal at around 1% of wage bill. Even in the retail sector it is only 5%. As a recent study of the London Living Wage shows, even that can be recouped through decreased turnover and better productivity. I don't often, if ever, quote Boris Johnson positively but he say, “I believe that paying decent wages reduces staff turnover and produces a more motivated and productive workforce”.

There has been good progress in extending the Scottish Living Wage across the public sector. The Scottish Government, NHS Scotland and most councils now pay this rate. The next stage is to persuade the Scottish Government to take further action including in the forthcoming Procurement Bill to promote the Scottish Living Wage including:

Use the Procurement Reform Bill to amend the Public Contracts (Scotland) Regulations 2006 to require that the living wage is a part of any contracting authorities bid for a public sector contract.
Seek to influence the European Commission to remove any perceived barriers in EU Directives that prevent the inclusion of the living wage in procurement.
Establish a Living Wage Unit to advise on, promote and oversee the living wage in the public sector and in procurement.
In partnership with stakeholders, develop and produce a Code of Practice on promoting the living wage in procurement.

Scottish Labour MSP, John Park is also consulting on his private members bill that seeks to achieve the above objectives.

Government’s at UK and Scottish levels also need to recognise the broader economic case for an increase in real wages. The shift in incomes from workers to the very rich is a key cause of the longest and deepest recession in a generation. Low paid staff spend more of their income locally.

While we have made good progress in achieving the Scottish Living Wage in the public sector, nearly one in four Scots are still earning below that level. So more action is needed to extend the considerable benefits across Scotland.

Wages and the economy

There is a focus on wages in the media today following Ed Balls performance at the TUC, John Swinney on Scottish pay policy and the launch of the Scottish Youth Parliament’s Fair Wages campaign.

Ed Balls rightly got booed by delegates at the TUC after a UNISON delegate asked him about public sector pay. As UNISON General Secretary Dave Prentis, said “if Mr Balls really understood the impact of three years of falling wages on struggling families he too would be calling for an end to the pay freeze."

Scottish unions met Ed Balls earlier this year on this very subject and UNISON Scotland tabled a critical motion at the Scottish Labour Party conference. While Ed Balls may get the fairness point, that is overridden by his political strategy. He wants to sound tough and credible on the economy and public spending. There are shades of his mentor here in the early years of the last Labour UK government. 

There are two problems with this approach. Firstly, it is a flawed political strategy because it undermines Labour support amongst a key voting group. Secondly, the economics are flawed, as cuts in real wages are a major cause of the current recession. A point I will return to.

As for John Swinney’s pay policy, including a “modest” 1% increase, no one can accuse John of being overstated! As I am quoted in the Herald this morning, "He did use the phrase modest, and I suppose 1% does come into that category. The truth is that the Scottish Government position has mirrored the UK position on public sector pay at every stage."

 

The Scottish Government does claim a social wage somehow tops this up. The no compulsory redundancy commitment is a serious element of that, but a regressive Council Tax freeze is not. Plus the pay policy and the redundancy pledge hasn’t been applied to the largest group of workers in local government. They didn’t get even the paltry £250 underpinning last year.

Let’s return to the economic argument for wages I put to Ed Balls earlier this year. I did say to him, rather pointedly, “that I thought he understood economics, but I now have my doubts”.  The facts are that since the start of the 1980s, the share of the economy going to wages has shrunk. Those with the highest salaries have done better than those below them and as a consequence average workers now get a smaller section of a smaller pie. The latest TUC research puts this wage gap at £7000 per year.

 

As the TUC paper says this is not just unfair, but bad for the economy as it holds back growth.

“Companies need customers with cash in their pockets. That is why the UK economy is scraping along the bottom. Employees are cutting back as their living standards are squeezed. And the public sector, far from making up the gap, is slashing spending too. But this wages squeeze was a prime – or should we say sub-prime – cause of the crash. Excess profits and bonuses went into the finance system rather than new investment. Workers deprived of proper pay borrowed to make up the difference. And when bankers stopped considering risk before lending, we had started the inevitable slide to the global crash.”

I will end this blog on a positive note. The Scottish Youth Parliament today launches their Fair Wages campaign that supports the Scottish Living Wage. An important part of this is to extend the living wage into the wider workplace and government procurement will be an important part of that. Young people in Scotland get it - sadly politicians have some catching up to do.

We all have an opportunity to make the point loudly on 20 October in Glasgow, when we march for a Future That Works.

Scottish Living Wage

I was giving evidence yesterday to the Scottish Parliament Local Government and Regeneration Committee as part of their living wage inquiry.

It can be argued that there has been a greater focus in recent years on tackling poverty in families with children and older people than those at work. The living wage is a key element in tackling poverty for those at work and the Scottish Living Wage Campaign has been at the forefront of efforts to extend this concept in Scotland.

The living wage is intended to provide a level of pay that adequately allows workers to provide for themselves and their families. The current rate in Scotland is £7.20 per hour. This is paid to staff in the direct employment of the Scottish Government including the NHS. Seven local authorities have adopted the Scottish Living Wage, most notably Glasgow that has also encouraged a wider take up in the city.

This still leaves 18,432 workers (7%) in local councils who are paid below the living wage. There are also around 350,000 workers in Scotland earning below this level including many in the private and voluntary sector who provide public services. For this reason the committee focused in my panel on how we can expand the coverage of living wage.

Some local authorities claim they can't implement the living wage because of single status and equal pay. This is simply an excuse for inaction. The easiest way to implement is by collapsing increments at the bottom of the scale as in NHS Scotland. While this may impact on differentials, it doesn't of itself create an equal pay claim. The other is by a top up payment that might create a theoretical equal pay claim. However, there is a Genuine Material Factor defence that can be objectively justified on several grounds. 

Expanding the living wage to the voluntary and private sector can be done through procurement. Legal advice to government and councils has highlighted the risk of challenge under EU procurement rules. Again there are ways of addressing this following the example of London and other councils elsewhere in the UK.

Finally, all those giving evidence emphasised the importance of establishing a Living Wage Unit. It could promote the living wage, give advice on the perceived barriers and provide practical support to public and private sector bodies that recognise the value the living wage brings to their organisation and the wider economy.

In all a very good evidence session and I hope the committee brings forward some positive recommendations.