NICOLA Sturgeon has condemned middle-men taking a cut of construction workers’ wages, but claimed there was little she could about it on one of her government’s flagship projects.
She said Holyrood needed more power over employment law to tackle the problem after Scottish Labour Richard Leonard claimed it was happening on the £745m Aberdeen bypass.
Mr Leonard raised the issue of so-called “umbrella companies” at First Minister’s Questions.
The firms process wages on behalf of companies who do not want to employ staff directly, and workers end up paying £20 to £30 a week in fees and employers’ national insurance.
The Unite union has called it immoral "wage theft".
In October 2015, the Scottish Government issued Fair Work guidance enabling public bodies to take the use of umbrella bodies into account in public procurement contracts.
However this only warned against “inappropriate” use of umbrella firms and “excessive” administrative charges, neither of which were defined.
Mr Leonard asked the First Minister how many big outsourcing companies had signed up to the voluntary Scottish Business pledge committing themselves to fair work practices.
After Ms Sturgeon was unable to give a number, Mr Leonard said no big outsourcing firm, such as G4S, Mitie, Capita, Interserv or Serco, had done so.
He said one worker for a railway electrification project at Shotts for the collapsed outsourcing giant Carillion had to pay up to £100 week to get wages.
He said: “Does the First Minister think it is acceptable for workers to be charged up to £100 a week simply to receive their wages?"
Ms Sturgeon said that was “absolutely outrageous” and she condemned “any company pursuing any practice of that nature”, and urged firms to sign the Scottish business pledge.
However she added: “Employment law remains reserved to Westminster. The Scottish Labour Party have long opposed employment law being devolved to this parliament.
“So, if the Scottish Labour Party wants to enable this government to take tougher action on practices like that will he join me today, now, in calling for employment law to be devolved to this parliament in order that we can do exactly that?"
Mr Leonard said the key issue was public procurement, not employment law.
He said: “Your government is handing over millions of pounds of public money to these companies, and they are treating workers shamefully.”
He then held up copies of payslips from the Aberdeen bypass, dating from November 2015, that he said showed people being “charged for the privilege of being paid”.
He said: “On a contract funded by your government workers have been blatantly exploited.”
Ms Sturgeon said her government had gone further than most others in the UK in terms of action on the living wage, zero hours contracts and blacklisting.
“We will look at any information Richard Leonard wants to make available,” she said.
But she said the legal context was reserved employment law, and Mr Leonard should help in equipping Holyrood with those powers.
If he did, “perhaps he will be taken a bit more seriously”.
The 28-mile Aberdeen Western Peripheral Route was due to open this spring, but the collapse of Carillion, one of the three firms in the partnership building it, has delayed its completion.
Balfour Beatty, one of the other partners, said summer 2018 would be the new finish date.
Balfour and Galliford Try are currently covering the costs arising from Carillion's collapse.
A government spokesman said: "The Scottish government continues to have discussions with [the partnership] Aberdeen Roads Limited in order to achieve an agreed date for the earliest possible completion of this project, despite the recent insolvency of Carillion We expect these to conclude shortly and will provide a full update to parliament at that time."
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