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Bringing the Living Wage to Scotland – an idea whose time has come

August 28, 2012 10:30 am

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“An idea whose time has come”. 

Not my words, nor even those of the Living Wage Foundation, on whose website the quote is so prominently featured, but David Cameron, the Tory Prime Minister, speaking about the Living Wage.

The momentum behind the Living Wage has been growing for some time. From its roots in a London Citizens campaign in 2001, it spread to Scotland where the Scottish Living Wage Campaign was established in 2007 following a Poverty Alliance conference.

The London Living Wage is now firmly established, with the Olympics being a high profile signatory to ensuring contractors and employees working on the site were paid. In Scotland,  those directly employed by the Scottish Government and NHS employees are all now recipients of the Living Wage following the last Scottish Parliament elections, where three political parties, Scottish Labour, the SNP and the Scottish Greens, all had a commitment to introducing the Living Wage for public sector workers. Both Labour and the Greens also committed to setting up a government-based unit to push the living wage as widely as possible among employers in Scotland.

It is with this background of cross-party political support and a strong voice from the third sector pushing for more action that I launched my consultation document on my proposed Living Wage (Scotland) Bill last week. The Bill focuses on utilising the significant powers the Scottish Parliament already has on public sector procurement.

Specifically, the Bill proposes to require private sector employees working on public sector contracts to be paid the Living Wage and it will also seek to require the Scottish Ministers to prepare and report to the Parliament on a strategic plan to promote the Living Wage across all sectors in Scotland.

Scotland’s public sector spends a tidy £9bn a year on procurement. I believe that those private sector companies who benefit from public sector contracts should spread that around in the most effective way possible and I want to make sure that level of spending reaches as far as it can into our local communities.

Over 28% of those employees in Scotland who earn less than the Living Wage are in the private sector. By introducing the living wage into the procurement process, the Bill is deliberately intended to help address low-pay in private sector employers who make profit from public sector contracts.

Much media coverage has been gained on the first proposal of my Bill to extend the payment of the living wage beyond the public sector by utilising procurement processes in Scotland but the second proposal is equally important.

As a backbench opposition Member in the Scottish Parliament, my powers to effect change obviously aren’t bolstered by the ranks of civil servants that a Scottish Government Minister would have at his or her disposal. However, this second part of my proposed legislation aims to utilise those very people in a constructive manner by placing an onus upon Government to promote the Bill to the private sector, encourage take-up of the Living Wage by all employers, monitor its implementation and report annually to Parliament on progress on disseminating the Living Wage throughout Scotland.

The proposals are not without controversy. In my opinion, the Scottish Government are currently hiding behind advice they have sought from the European Commission on the procurement side of it.  This is despite bringing forward their own procurement bill (a consultation on which is running concurrently with mine), and they have indicated they do not intend to bring forward any relevant  legislation to include the Living Wage.

Despite the warm words from the Prime Minister about the Living Wage, I don’t believe we can rely on either the Tories or the SNP to extend it beyond the public sector. What we are witnessing now from the Scottish Government is the classic absence of political will which is needed to drive this issue forward. Too often, you only get the answers to the questions you ask and I don’t believe the Scottish Government – either through deliberate choice or by accident – have asked the right questions regarding the European angle on procurement.

Currently over half a million Scots receive less than the Living Wage and 6 out of 10 poor children in Scotland live in families that suffer from in-work poverty. Surely those figures alone are enough to convince us that we must be bolder to deliver a living wage to those in work. It is certainly an idea whose time has come.

John Park MSP is a Labour Member of the Scottish Parliament for the Region of Mid Scotland and Fife. He is a member of the Parliament’s Energy, Economy and Tourism Committee. His consultation document (including details of how to respond) can be accessed here and closes on 3rd December.

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  • http://twitter.com/RF_McCarthy Roger McCarthy

    Which misses the point that the whole rationale for privatising so many once public services was supposedly to save money – and the only way a private sector contractor can offer to provide a service for less (assuming that that is what they do – which is very dubious indeed) while also turning a profit in a labour-intensive sector is by paying the workers less.

    Demanding they pay workers more will drive private sector provider  costs up very significantly and thus the price at which they tender for business.

    This isn’t necessarily because they are wicked and greedy – it’s because their banks and shareholders demand for profit is fundamentally inflexible – they have set targets for ROI, ROCE etc and if a contract doesn’t meet it they won’t tender for it at all.  

    So eventually the taxpayers will pay the difference anyway (and in a sense already has been – just look at how many pitifully low-paid jobs were advertised with implicit statements about working family tax credits).

    What is actually needed is a far more fundamental rethink of how we provide public services starting with a truly rigorous independent analysis of the true costs of the current system of competitive tendering whose true pillars are low wages, low to non-existent worker benefits and job security, high profits and an invisible subsidy to exploitative capitalists via the benefits system. 

    Having said that New Labour could only end up looking very bad indeed from such an analysis and a living wage provision that is carefully written to include all possible permutations of sub-contracting (and the pseudo-self employment which is particularly rife in construction) together with a refusal to pay more for privatised services might well force us to re-introduce public provision through the back door as we will find out that fewer and fewer providers will accept such terms and public bodies will have no choice but to deliver those services directly again. 

    But lets be realistic: the global corporations who truly rule this country and so much of whose profit is now derived from this new form of state monopoly capitalism are hardly going to allow this to happen by stealth anyway – the pressures to a) demand loopholes that will allow them to continue exploiting their workers, b) to open the purse strings again to let them pass on the cost of paying a living wage to the taxpayer and c) to overthrow a government that refused to do these things and thus really damaged their bottom line would be truly immense.

    Just look at the vast sums America’s corporate overlords are expending to secure the defeat of an utterly timid and pusillanimous President whose only conceivable threat to them is that he might just marginally increase their taxes  and business costs – how would they (and to a large extent they are the same global elite) react to a fundamental threat to the whole system of state monopoly capitalism that privatisation has created?

    Therefore a living wage is actually a classic example of what Trotsky called a transitional demand -  a policy which on the face of it is a reform that no sensible person can take exception to but is in fact unimplementable without breaking the capitalist system and moving the class war into a higher and more radical  phase.

    So lets go for it – but with open eyes as to what the probable outcomes will be.  

    • PeterBarnard

      I’m not sure that a “living wage” would actually break the capitalistic system, Roger.

      From 1945 to 1979, there was a far more equitable distribution of earned income and the capitalistic system in the mature western democracies was in pretty good health for most, if not all, of that period. What’s more, the more equitable distribution of income – allied with nearly full employment – generated material prosperity for most working people on a scale not seen before, nor since.

      The living wage concept is common sense.  

      • http://twitter.com/RF_McCarthy Roger McCarthy

        Of course its common sense – but our new neoliberal globalised post-industrial state monoply capitalist system cannot accomodate that sort of common sense in the way that national industrial capitalist economies could during what I too see as the  golden age of 1945-79 (during which there was incidentally no need for a living or minimum wage due to strong trade unions and full employment). 

        Insisting that G4S or whoever pay a living wage to every one of its workers in exchange for a state contract does not break the capitalist system as they will just demand more taxpayer money in their bids so they can pay those wages without reducing their profits.

        But that then does break the rationale for having private companies provide public services as they will then become indubitably much more expensive than having the public body employ its own staff to do the work at similar wage rates without grossly overpaid corporate managers, shareholders and bankers demanding their cut as well. 

        Plus our global corporate overlords have now established the need for austerity as the dominant political narrative – and austerity can’t easily be squared with letting G4S etc charge more and more money to provide the same services  – instead right-wing governments are just discovering that they don’t have to supply those services at all any more.

        So as long as the austerity narrative holds sway a living wage can only result in more cuts – force Crapita to pay its binmen and cleaners more money but not increasing the value of the contract will just mean they’ll either not tender at all or will  employ fewer binmen or cleaners, work them even harder and do a much worse job for the same money and with neoliberal ideology precluding public bodies going back to do the work themselves  they will over time reduce the services they buy accordingly. 

        This is the Iron Law of Competitive Tendering: everything is up for negotiation except the return on investment demanded by the shareholders and the interest demanded by the bank that is financing the deal (and who are generally the real  key players in construction and regeneration contracts that require serious capital outlay).

        So yes a living wage will break the particular form of state monopoly capitalism that has been created by privatisation, globalisation and financialisation since the 1980s and is a transitional demand in so far as it also necessitates other much more radical changes. 

        Which is why I support it.

        • PeterBarnard

          I see what you are saying now, Roger, but I did take literally your “breaking the capitalistic system” in your original comment, and not the refinement.

          A related example of “return on investment,” and a shameful one at that, is public subsidies for the private sector train operators.

  • Hamish Dewar

    John, I support the Living Wage initiative, but I think it is more important to ensure that the Minimum Wage, one of Labour’s significant achievements, is enforced.
    Beyond that. it is up to the individual, employee and employer, to agree on terms.
    You talk about extending this beyond the public sector while declaiming that c. 28% of those affected  work in the private sector. If the public sector have signed up to this, should that not be 0%?

    • dansmith17

      I spotted the same flaw but you have it the other way round, if only 28% of those on worse than the Living wage work in the private sector then 72% are employed in the public sector, but elsewhere it is said all public sector employers are signed up, that makes no sense.

      So is it that. Only part of the public. Sector have signed up, or is the data just wrong!

  • PeterBarnard

    I think that it’s only direct employees of the Scottish government and the NHS that are covered by a living wage agreement (third paragraph)?

    The public sector also includes local government, police, fire, education, and so on.

  • Hamish Dewar

    Thanks Dan.  I originally expressed the point the other way round, but when I changed the wording I failed to correct the percentage.

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