BUSINESS COMMENT By Chris Warhurst

The Scottish Low Pay Unit always existed to put itself out of business by ending low-wage work in Scotland. But with low pay becoming entrenched in the Scottish economy and political heat rising as pay falls behind inflation, its closure in April looks premature.

The decision to wind up the Cosla-funded SLPU was taken for financial reasons, after some local authorities withdrew funding. Its closure leaves Scotland without a dedicated monitor of low pay and a champion of low-paid workers at a time when such tasks are needed more than ever.

Around 24% of all employees in Scotland - around half a million workers - are low-paid, a percentage slightly greater than that of the UK overall. By common (though not universal) agreement, low pay means pay that is less than two-thirds of the median hourly earnings. In 2006, this equated to £6.50 per hour. Over the past 30 years, the level of low pay has steadily risen across the UK. While the introduction of the national minimum wage in 1997 by the Labour government flattened out the rate of low pay, there are signs that it is nudging up once again.

Of course, all countries have some low-paid jobs but the level varies considerably from nation to nation. In Denmark - one of the countries featuring in the SNP's "arc of prosperity" - it affects around 8.5% of employees. Danish employers and trade unions work together in the belief that social cohesion requires narrow wage differentials and higher incomes for all. Their minimum tariff, agreed between bosses and unions, is also considerably higher than our national minimum wage. Most recent figures show that it was just over 15 per hour, compared with the equivalent of around 8 in the UK.

Although the Scottish government wants to benchmark Scotland against countries such as Denmark, higher levels of low pay seem set to continue here. The government wants to see a "smart" high wage economy but many industries - for example, care and food processing - are built on low-wage work.

Moreover, other low-wage industries, such as retail and hospitality, underpin the tourism sector on which much of Scotland's economy so desperately depends. Low pay is endemic to these industries. No less than 75% of Scottish hotel workers and almost 60% of retail workers received low pay, according to Peter Kenway and his colleagues in the New Policy Institute think tank. Together these industries accounted for around 40% of all low-wage workers in Scotland.

These figures are also significantly higher than for the UK as a whole. A quarter more hotel workers receive low pay here in Scotland and a third more retail workers. Nevertheless, figures from the British Hospitality Association show that Scottish hotels have some of the highest occupancy rates in the UK, achieve more revenue per room than hotels in the English regions (and by some measures Wales) and that labour costs are similar to those elsewhere in the UK. Employers in Scotland can thus pay more, but choose not to. In-work poverty consequently characterises much of the Scottish economy.

Because of pressure from employers and timidity from London Labour, the national minimum wage (NMW) is set too low. It is currently £5.52 per hour and so more than 20% below the low-pay threshold. Any worker paid at or just above the NMW is therefore defined as low-paid. Worryingly, in industries such as hospitality, the NMW is becoming the going rate, not the minimum rate. Some employers avoid paying even this low rate, as the UK government has recently recognised; so it's hard to keep telling people that work will lift them out of poverty if in-work poverty is the real outcome.

This is a problem for the whole of Scotland, not just the low-waged. With the state offering remedial help, shoring up low pay through Working Tax Credits and other benefits, it is tax payers who subsidise the low wages paid by employers.

You don't have to be Polly Toynbee to recognise that recent cost of living hikes hit the lowest paid hard. Muted household gas and electricity price rises to £1000 per year will eat up nearly 10% of the average £11,000 per year earned by low-wage classroom assistants in Scotland revealed last year by Equal Opportunties Commisson reseach. Indeed, 22% of all low-wage workers in Scotland work in the public sector. It is no surprise then that public-sector strikes over sub-inflation rate pay offers are looming in Scotland this coming week. These workers are low paid and their wages are about to afford even less.

If the SNP wants to a pick meaningful fight with London, it should be over low pay - decent wages have to be a priority for Scotland. The NMW might provide a legal wage floor but the level of that floor in the UK is low compared with other countries and often weak, with too many employees falling through its holes. Although it is set by Westminster, Scottish MPs of all parties must push for the NMW to be raised and more effectively monitored and enforced.

Professor Chris Warhurst is co-director of the Scottish Centre for Employment Research at Strathclyde University and was academic adviser to the Scottish Low Pay Unit