NICOLA Sturgeon will today unveil plans for a new Scottish Government-backed gold standard for firms to pay employees a living wage and contribute to a “fairer society”.
The First Minister hopes the new Scottish Business Pledge, which involves a commitment to phasing out zero-hours contracts and hiring more women staff, will become a “badge of pride” for firms. But industry leaders last night warned that many smaller firms will struggle to pay the living wage of £7.85 and urged ministers to be practical to “make the numbers work”.
Poverty campaigners insisted most companies already pay the living wage but said the new voluntary code will help create a fairer economy and ensure workers are “treated with respect”. The pledge is part of the government’s new economic strategy to commit to “fair and progressive policies”.
It is made up of nine components and firms wanting to commit to the pledge must pay the living wage to all workers over 18, deliver on at least two other elements and be committed to achieving the rest over time.
Ms Sturgeon and Deputy First Minister John Swinney will join Heart of Midlothian FC owner Ann Budge at Tynecastle as the newly promoted Premier League team becomes one of the first companies to sign up.
Mr Swinney said it represents a “new partnership” between government and business to promote “fairness, equality and sustainable economic growth”.
He said: “There is a large body of credible evidence that shows progressive workplace practices – like workforce engagement, taking an active role in the community and investing in innovation – benefit companies through increased productivity, enhanced employee commitment and improved reputation.”
As well as the living wage, the pledge also covers issues including zero-hours contracts, investing in young people, pursuing innovation and internationalisation, and diversity.
Mr Swinney added: “The Scottish Business Pledge should become a badge of pride for Scottish business, sending a clear signal to employees, customers, the supply chain and the wider community that companies have strong growth ambitions and acknowledge their contribution to a fairer society.”
The living wage is widely seen as the level required for an adequate standard of living. It is higher than the £6.50 legal requirement, the minimum wage.
Andy Willox, the Federation of Small Business’ Scottish policy convener, said firms want to make Scotland a better place to “work, live and do business”.
But he added: “These laudable ambitions will require a great deal of effort and attention to detail. The Scottish Government’s business pledge must be applied sensitively. This can’t become a public sector tick-box, or corporate PR exercise.
“We’re pleased that attempts to tackle the scandal of late payment have been included.
“But the understandable government drive to boost wages must be accompanied by practical measures to make the numbers work in the sectors where pay and margins are a problem.”
CBI Scotland director Hugh Aitken also said that not all firms would be able to pay the living wage.
Mr Aitken said: “Living wages can be a useful guide for those businesses able to pay more but individual business circumstances vary hugely, so this should be done on a voluntary, aspirational approach.
“We already have an effective universal wage floor, the national minimum wage, which enjoys strong support from the business community.”
The CBI chief also welcomed the “collaborative approach” of the Scottish Government.
“Scotland’s firms have so much potential and as long as the Scottish Government continues to create a positive environment where businesses can thrive and grow, they will keep rising to the challenge,” he added.
Campaign group the Poverty Alliance runs a living wage accreditation scheme in Scotland to which more than 200 firms have signed up.
Peter Kelly, director of the Poverty Alliance, said: “The goal of creating a fairer economy and more socially just Scotland requires employers to play a full and active role.
“Simply creating more jobs on its own is not enough. Those jobs need to be ones that pay a decent wage, have regular and sufficient hours and where workers are treated with respect.
“Whilst most companies act in this way already, too many do not. The launch of the Scottish Business Pledge is an important step forward in helping to create that fairer economy. We hope that employers signing up to the pledge will show the way for others across Scotland.”
Ms Budge, Hearts chief executive, said she was “very proud” to sign up to the pledge.
She said: “By introducing the living wage across our business, by investing in youth education and staff education, by engaging fully with the community and by working closely with the Foundation of Hearts to introduce fan ownership, we are the perfect match for this initiative.”
Labour MSP Jackie Baillie said the party was behind any moves that promote the living wage and “fair work” in business.
But she added: “Last year the SNP refused to back Scottish Labour plans to oblige private companies bidding for public contracts to pay the living wage.
“I hope this new voluntary code is successful and shows how many good employers there are in Scotland.”
Scottish Conservative enterprise spokesman Murdo Fraser said the Scottish Business Pledge appeared to be a “decent strategy” in principle.
But he warned: “Scratch beneath the surface and it would be realistic to say that many small to medium-sized business cannot afford to pay staff the living wage.”