Comment: Scotland should take lead with living wage

Jeff Salway
Jeff Salway
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ITS benefits for household finances, savings levels, employers and the wider economy are proven and significant. The advantages of adopting the living wage – £7.85 an hour (£9.15 in London), compared with the £6.50 minimum wage – are numerous and enormous. Yet too many of Scotland’s big employers still don’t get it.

A BBC Scotland documentary screened last week, Low Pay For Life, underlined just how far we have to go. When 50 of Scotland’s biggest private sector employers were asked if they paid the living wage, just ten said all their staff received it.

Several, including Clydesdale Bank, Scottish Power and Centrica pay the living wage to directly employed staff but not to contractors.

The others either don’t pay it, claim the minimum wage is sufficient or fudge the answer by referring to generic staff benefits. They include Tesco, Boots, Next, McDonald’s, Sainsbury’s, Hilton Worldwide and Greggs. Half of Scotland’s premiership football clubs continue to pay some staff less than the living wage, including Celtic.

The Confederation of British Industry (CBI) predictably claims that jobs would be lost if companies had to pay the living wage. It’s a short-termist argument that wilfully ignores the bigger picture. They said the same when the minimum wage was introduced, only to be proved wrong.

The CBI is on the wrong side of the living wage argument too. Employers that have fully adopted the living wage say that once implemented, it doesn’t cost them a penny more. In fact the long-term benefits are considerable, not only to employees and the company reputation, but also the bottom line. Staff paid the living wage are likely to feel valued, contribute more and stay on board for longer, reducing recruitment costs and improving productivity.

One firm, KPMG, credited a 50 per cent reduction in turnover of staff to its adoption of the living wage. “The individuals were getting the benefit of the living wage but neither KPMG nor the subcontractors were having additional cost as a result,” it said.

If the only way big firms can pay the living wage is by making redundancies or cutting dividends to shareholders, then perhaps they should be reviewing their business model.

The UK-wide living wage campaign has been dealt a huge blow with the election of a Conservative government with little interest in the issue. But pressure continues to build. Institutional investors (such as pension funds) that collectively manage around £50 billion of assets recently asked retailers including Tesco, Sainsbury’s and Marks & Spencer to adopt the living wage for their employees.

The Scottish government can be applauded for promoting the Scottish Living Wage Accreditation initiative (although the SNP last year voted down Labour proposals to make firms awarded public sector contracts pay staff the living wage).

First Minister Nicola Sturgeon used her party conference speech two months ago to pledge that 500 companies will have Scottish Living Wage Accreditation by next spring (it currently stands at just 200). But another 300 firms over the next year isn’t enough. Scotland needs to be more ambitious and take a lead on the living wage, for the good of its workers, its businesses and its economy.