James Kelly: Living wage key to a better economy

Nationawide became the latest major employer to pay the living wage recently following in the footsteps of companies such as KPMG. Crucially, both pay the living wage to both their directly employed and contracted staff, which makes them rather more “progressive”, to borrow a favoured political buzzword, than the current Scottish Government.

Scotland has a proud record on the living wage, with public sector pay ensuring its payment to direct employees. Unfortunately, the existence of a low pay loophole undermines the entire affair when we learn that low pay professions, such as cleaning, catering and retail, at public agencies are contracted out, where people are working for an hourly rate below the living wage.

That is why promoting the living wage via the Procurement Bill is essential to delivering better wages in this country. We spend £10 billion a year on public contracts and delivering a pay rise to low paid workers is the right way to use that spending power. If the living wage is delivered as a contract performance clause, as I have argued for, then it would make a real difference to workers across Scotland. It would represent a £2,600 pay rise to a full-time minimum wage worker, a figure that makes a huge difference to working people struggling with a cost of living crisis.

But there is also a symbolic power here as well. By delivering the living wage in public contracts, Scotland’s public sector sends out a message that this is how we should do business in Scotland.

When we see the benefits of better pay – lower absences, higher morale and improved performance – we see that the living wage is sound policy from both social justice and economic perspectives. Kristy Dorsey pointed out in Scotland on Sunday last week that private sector uptake of the living wage could be better; that is why we need to lead on the issue.

This symbolic power has it roots in real examples. KPMG can track improved service for customers and have found that staff turnover in lower paid jobs has halved – along with the costly bureaucracy associated with it.

Further to this, KPMG have found that promoting the living wage as part of their procurement programme encourages their partners and suppliers to consider the benefits of the living wage, and many are now living wage employers.

Simply put, if you promote the living wage effectively, private sector employers take notice, see the benefit and start paying it because it makes sound economic sense to do so.

Polling has shown that people were more likely to use the wage boost to pay bills, buy food and save. It has also shown that more than half of people were more likely to use the goods and services of living wage employers.

So the economic case is clear. All it needs is a little leadership from the Scottish Government.

The SNP have previously hidden behind “European Law” to justify not delivering it to workers on public contracts. I was hugely disappointed when Nicola Sturgeon used that as an excuse when instructing her MSPs to vote down my amendment at the Stage 2 reading of the Procurement Bill.

As The Scotsman reported last week, the First Minister was somewhat embarrassingly slapped down by the European Commission when he was told no such law exists. This was perhaps news to Alex Salmond but the rest of us knew this was the case when the question was answered by the European Commission in 2009. And again in 2013.

The final reading of the Procurement Bill is scheduled for 13 May. There are no barriers to delivering fairer wages to more workers across Scotland, and to building a better economy in the process. «

James Kelly is the MSP for Rutherglen and Scottish Labour’s infrastructure spokesperson