A fair day’s pay for a fair day’s work.
That is the simple principle behind the real Living Wage. And right across Scotland, more and more employers are realising that paying their staff a fair rate is not only the right thing to do, it also brings huge benefits for their organisation.
This week is Living Wage week, where we shine a light on the importance of the Living Wage and how it can make a genuine difference to people’s lives.
On Monday the Living Wage Foundation announced the new rate for the year to come – an increase from £9.00 to £9.30. Accredited employers have until May 2020 to pay the new rate. So how does this differ from the legal minimum wage?
A critical difference is that the Living Wage is voluntary – with no obligation for employers to pay it. They embrace it because it’s the right thing to do for them and for their workforce.
It is higher than the minimum wage, which currently sits at £8.21 for over25s, meaning a substantial difference in wages over the year. Significantly, the real Living Wage applies to all workers over the age of 18, whereas the minimum wage has different rates for those under 25.
And, perhaps most importantly of all, the real Living Wage is based on the cost of living, so it reflects the kind of bills and obligations that working people face on a daily basis.
In the absence of legislative power over employment law, the Scottish Government has been working with the Poverty Alliance and Living Wage Scotland to promote the benefits of the real Living Wage. There has been good progress in Scotland in recent years.
We now have more than 1,600 employers who are paying the real Living Wage, and figures out recently show that the proportion of people earning at least the real Living Wage in Scotland has increased to 83.1% – up 2.5 percentage points since 2018.
That is good news because it means more people have a pay packet that is likely to cover their day-to-day costs.
They are more likely to have peace of mind, to be able to provide for their children and to make plans for the future. But what really strikes me when I am out and about meeting employers is the massive benefits that they get from paying the Living Wage.
We know that a fairly paid workforce is likely to be happier and more productive.
It can also contribute to reduced absenteeism and better staff retention. When I visit companies that pay the Living Wage and meet employees, it’s clear to see how much they value it. A total of 93% of businesses say they have benefited in some way since gaining accreditation, according to Living Wage Foundation research.
A total of 86% said it had improved their reputation, and 75% said it had increased motivation and retention rates.
It should also be remembered that fair pay is an investment in the local economy – by paying this rate you are putting money into the pockets of people who in turn support other local businesses in the community.
- READ MORE: SNP MPs to demand end to 'rip-off' of workers under 25 amid criticism of Tory minimum wage policy
Despite the progress we have made, there are still people who are earning less than the real Living Wage, and that means there is still work to do.
That is why I am determined to continue talking about the benefits, and encouraging all employers who are able to do so to become accredited Living Wage employers.
The Scottish Government has long championed the real Living Wage, and we led by example by becoming the first administration in the UK to become recognised as an accredited Living Wage employer.
We will carry on working with the Poverty Alliance, who run the accreditation scheme in Scotland, to encourage uptake, and to help build a Living Wage Nation, boosting the salaries of those on low pay.
As we go forward, there will be a particular focus on the hospitality and tourism sectors, where there are many lower paid jobs. We know that these sectors are dominated by female workers, many of whom tend to be part-time. By focusing on lower-pay industries, we can ensure that – for those who are able to work – paid employment offers the best and most suitable route out of poverty.
Delivering a fairer, prosperous economy is a priority for the Scottish Government, and I know that it is a priority for businesses too. To achieve this we want a fairer labour market right across the board, and by that I mean employment that offers not just fair pay, but also more security, opportunity, fulfilment, respect and a greater voice for workers in the companies whose wealth they help to create.
Fair work is not only good for everyone but it also drives innovation and productivity. That is why I would urge all employers to seriously consider following the example of hundreds of other organisations across Scotland, and becoming accredited living wage employers.
I am confident it is a move they will not regret.
- Jamie Hepburn is the minister for business, fair work and skills.
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