SNP’s Business Pledge snubbed by firms over ‘unaffordable’ Living Wage

A flagship Scottish Government drive to raise workers’ pay above the national minimum wage has been snubbed by firms who are finding it unaffordable.

Nicola Sturgeon visits Living Wage employer Mackie's ice cream in Inverurie

Fewer than one in 500 companies across the country have signed up to the Scottish Business Pledge, which was launched by Nicola Sturgeon four years ago with the aim of providing enhanced wage deals for Scottish workers. The aim of ensuring firms pay a £9 an hour “real living wage” – above the statutory national living wage of £8.21 – was at the heart of the scheme. The number of Scots workers who don’t receive the living wage hit a seven-year high in 2018, with one in five (470,000) missing out, official figures have revealed.

But many smaller firms have warned they face a struggle to survive as taxes and other costs of doing business soar.

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Paul Waterson of the Scottish Licenced Trade Association, which is seeing three pubs closing a week, said: “It’s very difficult for small, independent operators in our types of business, where the vast majority are just keeping their heads above water, to pay more than they are expected to pay.

“I always think it’s very unfair of government to say ‘well that’s morally sound and a good idea – but we’re not going to give you anything back to pay for it. In fact we’re going to increase rates, we’re going to increase this, that and the next thing’.”

Unlike in England, most pubs in Scotland are independently owned, not part of a wider chain.

Just 631 employers have signed up to the Scottish Business Pledge. There are 345,000 private firms across Scotland, as well as hundreds of public sector and voluntary organisations. The pledge includes other commitments, including a limit to zero-hours contracts, internationalisation and creating a family friendly working culture.

A total of 1,450 Scots firms are officially living wage accredited under a separate scheme run by the Poverty Alliance.

Scotland’s business community has already been angered by recent moves to introduce a tourism tax and breaking a pledge not to cut airport departure tax. They fear they will also have to “foot the bill” for last week’s bottle deposit return scheme.

Concerns over the rising costs of employment also centre on national insurance and pension contributions and the apprenticeship levy.

David Lonsdale of the Scottish Retail Consortium said: “There ought to be a more rounded consideration of this issue, one that takes into account total reward rather than pay rates alone.

“For example, our recent employment survey found that on average the total reward package for retail staff was 19 per cent above the NLW [living wage] and 27 per cent more than the NMW [minimum wage].”

But Peter Kelly, director of the Poverty Alliance, insisted the real Living Wage was a “key tool” to tackling poverty in Scotland.

“Paying at least the real Living Wage is good for their business, for their workers, and for society,” he said.

A Scottish Government spokesman insisted firms are being supported through measures, including rates reliefs worth an estimated £750 million. A “fair work” criteria will also be introduced to qualify for support grants and public contracts, including the real Living Wage.