Ann Budge, the chairman and owner of Heart of Midlothian Football Club, called the introduction of the Living Wage at her Edinburgh club a “no brainer”.
Speaking last week at the Making Work Pay breakfast meeting, organised by the Edinburgh Partnership at Tynecastle Stadium, she outlined the reasons why Hearts have adopted the Living Wage.
Other employers including Standard Life, who employ over 4,000 people in the Capital; Rabbie’s Small Tours, one of the most progressive tour companies in Scotland; and Bluebird Care, a care-home specialist, joined her to support the Living Wage.
This will further fire up the pre-election rhetoric about the increasing gulf between the mega-rich and the poor in UK society and the gap between the National Minimum Wage, which is covered by legislation, and the voluntary Living Wage. Draft regulations on minimum wages across the UK are currently before the UK Parliament National Minimum Wage Regulations 2015.
In essence, the national minimum wage is the single hourly rate of £6.50 for a worker who is aged 21 years or over; £5.13 for a worker who is aged 18 years or over (but is not yet aged 21 years); and £3.79 for a worker who is aged under 18 years. This is likely to come into force from 6 April.
The Living Wage is £7.85. It is set by the Centre for Research in Social Policy at Loughborough University and takes into account the Joseph Rowntree Minimum Income Standard (MIS) research which looks at the actual cost of living. That’s an extra £54 a week for a low-paid worker.
Ann Budge told the gathering: “In simple terms, it is the right thing to do. We all appreciate the moral arguments and we shouldn’t be taking advantage of people.”
Of course, she is absolutely right and the Living Wage might well become good business practice for all firms in Scotland, especially when applying for local authority contracts.
She spoke about the anomaly of high pay for cosseted footballers, although she added there were no big earners now at Tynecastle!
“When we first came in and looked at the contracts and the salaries people were being paid, there were a number of employees in the club who hadn’t had an increase in salary for six or seven years. And that’s appalling,” said Ms Budge.
She said although Hearts were in a tough financial position, this was taking advantage of people who were incredibly loyal: “The one thing about a football club is you get the loyalty of staff at all levels.”
She said it was an obvious thing to do and implement quickly. “We believe there is a fair rate for a job.”
There will be a great deal of hand-wringing from some business people about the widespread rise of the Living Wage, including economists who will warn it sparks wage inflation, causing prices to rise and jobs to be lost. But if cash-strapped Hearts can do this, then it begs the questions why aren’t more doing it.
Councillor Frank Ross, convenor of the economy committee with City of Edinburgh Council, pointed out that Edinburgh is a rich city, and that the cost of living in the capital is high compared to the rest of Scotland. Yet 20 per cent of the population still live in poverty, with 52 per cent of this figure in work but stuck in the trap of very low pay.
Councillor Ross says Edinburgh Council is leading the way on low pay – and future weighting for contracts will include marks for accredited Living Wage employers, who have a confirmed licence agreement with the Living Wage Foundation. However, it has to be recognised that increasing contractors’ pay in traditional areas of low pay, such as catering, cleaning and security services, will not be easy to achieve when council budgets are being hacked back.
Nevertheless, the case for the Living Wage is that employees are more productive. There is also the improvement in morale, motivation and commitment from staff.
As an employment lawyer, I have witnessed many companies become embroiled in disputes over pay. But the moral argument is shifting towards granting people in Scotland a Living Wage for all full-time workers. That can only be fairer for all of us.
• Malcolm Mackay is chairman of United Employment Lawyers