Monday, 19 May 2014

The Living Wage within Public Contracts in Scotland Debate

By Steven Low

Last week, a vote to enforce a ‘living’ wage into all public contracts in Scotland was defeated at Holyrood.  As part of an amendment to the Procurement Reform (Scotland) bill, Labour had hoped to make it a condition that companies who get public sector contracts must pay their workers the Living Wage - currently £7.65 an hour in Scotland.  To put into context, the minimum wage is currently set at £6.31 per hour for over 21s.  The living wage has been a talking point over the last couple of years as those lower down on the pay scale are still struggling to see any benefits from economic recovery.  While the minimum wage is a legal requirement, the living wage is voluntary although some suppliers have taken on the burden to give a wage that reflects some say more accurately, the actual cost of living.

With the Scottish Government spending over £10billion per year, the move would have seen a potential wage increase to over 400,000 workers (64% women, 36% men).  Any employee on the minimum wage would have stood to receive almost £2,600 per year extra.

So was it a good idea?  Is it still something worth pursuing?  What are the potential increases in contract costs?  Would it show a long-term benefit to Scotland and its citizens?

Lots of questions and not being a politician, a statistician or an economist, means I’m not best placed to answer!  However, one thing to note is that the amendment was defeated due to the concern that it would conflict with EU law.  Certainly, the amendment made to the Procurement Reform Bill from the SNP will ensure that going forward, companies will have their willingness and ability to pay the living wage assessed.  How much this assessment will count for when choosing the supplier to award the contract is yet to be determined.  Whatever is decided will mean a direct impact to how we go through the sourcing and evaluation process.  The overall Procurement Reform bill was unanimously passed on 13th May 2014.  The offices I happened to be working in all went very quiet on Tuesday afternoon while I noticed an amazing array of headphones being worn.  Worried that I was missing out on some great cat video or the latest celebrity fail clip, I rushed over to find everyone watching the BBC live stream of the Holyrood session on the bill - phew!  The highlights are still on BBC.

Alternatives to the living wage have also been discussed up here in Scotland.  Tying our national wage increases to inflation to ensure that the wage ‘keeps up’ with the rise in prices is certainly under strong consideration.  Whatever happens, this topic has a long way to go before it is agreed and I expect we will hear much more about this on a UK level very soon.





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