Government and NHS workers to get pay rise as living wage increased to £7.45

John Swinney has increased the living wage, Picture: TSPL
John Swinney has increased the living wage, Picture: TSPL
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THOUSANDS of low-paid government and NHS workers will see their pay rise next year, after the living wage rate was increased to £7.45 an hour, finance secretary John Swinney announced yesterday.

• Living wage first introduced in 2010/11 by Scottish Government for around 6000 workers and rate has increased from £7.20 to £7.45

• New rate will apply from April 1 2013

• Scottish Government pay policy provides basic pay increase of £250 for all staff earning less than £21,000

It marks a jump from £7.20 this year and Mr Swinney called on all employers to follow suit. But business leaders warned that the rate was “not realistic” for many firms.

The commitment is in line with the Scottish Living Wage Campaign and the Living Wage Foundation’s new recommended level to ensure all staff on lower incomes receive a fair level of pay.

The SNP government introduced a living wage in 2010-11 and yesterday’s announcement means about 3,300 workers will see their pay rates go up.

“The living wage is a positive step that all employers can take to help boost consumer confidence and strengthen economic recovery, while helping to provide certainty for individuals and families who are already dealing with pressures on family budgets,” Mr Swinney said.

The current living wage, which is voluntarily paid by some firms, is more than £1 above the £6.19 minimum wage for adults, which is a legal requirement for all employers. Since the living wage was introduced in 2005, an estimated 11,500 workers across the UK have benefited.

The Scottish Government controls wage levels for most civil servants in central government, government agencies, non-departmental public bodies (NDPBs) and the NHS. The new rate will apply from next April.

Mr Swinney added: “We would encourage all public, private and third-sector organisations to recognise the benefits of this approach and do likewise.”

But business leaders in Scotland warned that recessioni-hit firms must not be forced to implement the new rate. CBI Scotland assistant director David Lonsdale said the minimum wage provided an “affordable pay floor”.

He added: “Some firms may choose to pay more if they can, but this must be their choice based on their own business situation, as any move to a living wage could increase costs across all pay scales as other staff seek to maintain their differentials.”

Colin Borland, head of external affairs at the Federation of Small Businesses, said most firms did pay living wage levels.

But he added: “Spiralling energy and fuel costs and weak demand in many sectors mean that for many small businesses, this isn’t a realistic option.”

The new living wage rate will cost about £430,000 to implement across all public sector areas where the Scottish Government controls the pay bill. Ministers say EU law stops them forcing firms that carry out government contract work to pay a living wage.

The new rate was welcomed by Peter Kelly, chair of the Scottish Living Wage campaign. “With the problem of in-work poverty continuing to increase, the Scottish Government’s support for the living wage must be congratulated,” he said.

London mayor Boris Johnson also announced yesterday that the living wage rate was to increase in the UK capital to £8.55, but was forced to admit that no Conservative-led council had signed up to it.