Putting 25% of low earners on Living Wage 'could boost Scots economy by £89m'

Scotland’s economy could be boosted by £89 million if just a quarter of low earners saw their pay raised to the real Living Wage, according to a new report out today – which is calling for more employers to sign up to the scheme and help drive the recovery from the pandemic.

The research published by the Living Wage Foundation and think tank the Smith Institute found that if low-paid workers were lifted onto a Living Wage of £9.50 an hour, they would each see an annual pay rise of £520 on average – which in turn would boost productivity and spending.

Glasgow city region would be the biggest beneficiary in Scotland, seeing an almost £30m boost, while a number of local authority areas would also benefit, including Edinburgh (£7m), Aberdeen (£3m) and Dundee (£1.8m).

The report – which comes amid the imminent end of furloughing – also stated that Scotland now has the lowest proportion of employee jobs paid below the Living Wage (15.2 per cent) of all UK regions, but this means 350,000 people are still paid below this threshold.

The Living Wage 'provides a growth dividend for local economies' as well as enhancing the lives of low-paid workers, the Smith Institute says. Picture: Jane Barlow/PA Wire.

There are 2,190 accredited Living Wage employers in Scotland currently, whose participation in the scheme has meant a pay rise for 45,600 workers.

Graham Griffiths, director of the Living Wage Foundation, which is supported by the likes of Aviva, Ikea, KPMG, Nationwide, and Oxfam, said the real Living Wage “offers a clear way to now recover and rebuild with stronger foundations, making Scotland’s economy even more vibrant and productive than before the pandemic, while also ensuring the country’s low paid aren’t left behind”.

He added: “Scotland’s workers and families need jobs that meet their everyday needs and allow them to thrive, while its businesses need healthy and motivated workers unburdened by the stress of low pay – and local consumers with sufficient wages to stimulate economic growth. The Living Wage provides all of this and more – and must now be a priority for those looking to revitalise the Scottish economy through and beyond the pandemic.”

The real Living Wage can make Scotland’s economy 'even more vibrant and productive than before the pandemic', according to Graham Griffiths of the Living Wage Foundation. Picture: contributed.

Peter Kelly, director of Scotland’s anti-poverty network The Poverty Alliance, also commented, saying: “Too many workers across Scotland are in the grip of in-work poverty, and the real Living Wage can loosen that grip.

Gains

"We know that the real Living Wage is good for workers, and good for business, and new evidence suggests significant financial gains for local economies too. We encourage more employers to engage with our Living Wage Scotland programme on becoming accredited as Living Wage employers, and we encourage key local institutions to consider ways they can do more to ensure decent pay and conditions are at the heart of their local labour market.”

Furthermore, Paul Hunter, deputy director of the Smith Institute, said the Living Wage “transforms” the lives of low-paid workers and boosts business performance, but “also provides a growth dividend for local economies”. He added: “As we exit the worst of the pandemic, increased Living Wage coverage can boost spending and support a wage-led recovery in our towns and cities.”

The Living Wage Foundation has called on metro mayors and local authorities looking to recover from the Covid crisis to develop action groups to drive Living Wage take-up in their areas, and to integrate the initiative into their economic development strategies.

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