Living Wage (Scotland) Bill

The UNISON Scotland Response to the consultation on the proposal for a Living Wage Bill by John Park MSP Nov 2012

UNISON is Scotlands largest trade union in public services representing more than 160,000 members delivering a wide range of services in the public, community and private sector. We welcome the opportunity to respond to the proposal for a Living Wage Bill put forward by Park MSP. UNISON has been a long time supporter of the idea that all of those delivering public services should receive a Living Wage regardless of employer. We believe that public service organisations have a duty to demonstrate good practice in employment including, a Living Wage. We believe that this duty extends to those they contract to do work on their behalf. It is right that public bodies take the widest consideration of public good into account when they spend public money and insulating the population from poverty is certainly a public good. Living Wage The Scottish Living Wage is good news for workers; they get higher wages that also improves health and job motivation. Its good for employers because it reduces turnover, improves productivity and attracts better staff through reputational gain. The wider community benefits through lower benefit cost, less stress on the NHS and cash into the local economy. The Institute of Fiscal studies has calculated sub-living wage employers cost the taxpayer 6bn a year in in-work benefits alone. The indirect cost on poverty is around 25bn a year. In contrast the cost to employers is minimal at around 1% of wage bill. Even in the retail sector it is only 5%. As a recent study of the London Living Wage shows, even that can be recouped through decreased turnover and better productivity. Even Boris Johnson, the Tory Mayor of London said, I believe that paying decent wages reduces staff turnover and produces a more motivated and productive workforce. That the majority of councillors elected in may 2012 supported the Living wage and the vast bulk of Scotlands councils either have or are in the process of instituting a Living Wage for their own staff shows the idea has widespread public and political support. We do not accept that EU rules prohibit the setting of a Living wage as a condition of awarding a contract. In London, the Greater London Authoritys Conservative mayor, Boris Johnson,has continued with the strong London Living Wage policies introduced in 2006 by Ken Livingstone. The GLA has successfully introduced the LLW into existing and new contracts and has extended it to more than 3,000 employees working for GLA contractors. This has been done by implementing it on a case by case basis for each contract, carefully taking account of EU Public Procurement Regulations and Best Value. UNISON Scotland believes that payment of the living wage can be included as a contract performance clause that sets out how the contract is to be performed and must be accepted by the successful tenderer. While there is a theoretical risk of legal challenge, there have been no successful challenges to the policy in the UK. Procurement rules are currently being reviewed by the EU. The Internal Market committee of the European parliament has put forward some 1700 amendments to the Commissions proposals most of which involve the building of social considerations into the procurement process. A significant part of this is ensuring that EU rules are not a barrier to Living Wage policies. There will be a vote on the proposals in January. So it

seems possible that even the theoretical possibility of Public Service bodies falling foul of EU regulations could be removed. A Living Wage Uni, properly constituted and pro active can ensure a Living Wage is part of the contracting process and minimise the risk of challenge under EU Rules. We support the Bills call for Scottish Ministers to be responsible for promoting a Living Wage, and be required to report to Parliament on a strategic plan to promote the Living Wage We believe that this can most effectively be done by the setting up of a Living Wage Unit by the Scottish Government. This body should be set up in such a manner as to be able to carry out several function; Defining the living wage, encouraging and ensuring public bodies make the living wage part of contracts, promotion of the Living Wage. Currently the level of the Living Wage is driven by work done for the Joseph Rowntree Foundation by researchers at Loughborough Universitys Centre for Research in Social Policy. We believe a Living Wage unit in Scotland would be the appropriate body to calculate and define a Scottish Living Wage. In order to carry out other functions most effectively the structure of the the Living Wage Unit and its relationship to the rest of the governmental machine need to be carefully considered. Ideally, whilst ultimately accountable to Ministers the Living wage Unit would be best not being part of a Scottish government department. It must however work closely with civil servants across Government, and with other bodies. Its role would encompasses both facilitation and scrutiny meaning that whilst it would not be perceived as wholly external to government, neither would it be seen as entirely internal either. The model we have in mind for this role is that of the office of the Scottish Commissioner for Children and Young People (the Commissioner himself is not a Ministerial appointment). There, clear strategic aims are outlined and the office serves as both a source of policy and direction; and acts to promote its core aim. Requirements on Ministers We fully support the Bills proposal that Ministers should both develop a strategy to promote the living wage and report to Parliament on it. We fully support the idea that before drawing up a plan the Scottish Government should consult widely, not least with Trade unions. When formulated the plan should be placed before Parliament. Any such plan, we believe should go beyond merely stating aims and objective, but specify actions and timeframes within such actions should take place. Details of how and where the Living wage fits into wider Government aims and objectives should also be a feature. As regards the Report to Parliament we would agree with the suggestions made in the consultation document that the report should include

low-pay mapping of Scotland and any conclusions (including type of industry; equality groups and work sectors i.e. private sector); statistics showing the delivery of the Living Wage and any conclusions (in the public sector, private sector and third sector); details of any promotional activity undertaken to increase the number of employers paying the Living Wage and outcomes; Any other activities as set out in the strategic plan and whether these were delivered on time and achieved their objectives.

The report, when published should be the subject of significant parliamentary scrutiny. The report should be considered by (at least one) relevant parliamentary committee and be subject to a full parliamentary debate and vote before being accepted. The report, we believe should include (at least): An explanation of how the Living wage rate is calculated together with detail as to the most significant factors in determining the current level. Details of any difficulties encountered in ensuring a living Wage in public sector contracts together with plans for how these are to be overcome. Details of how and where the Living wage fits into wider Government aims and objectives.
Outcomes

We believe that one of the most important outcomes of a proactive stance on the Living Wage as envisaged by the Bill will be the promotion of equality and the contribution it can make to closing the gender pay gap. The majority of those who will benefit are women - often working part time. Responses to Specific Questions
QUESTION 1: Do you support the general aims of the proposed Bill? Yes. We believe that everyone providing public services deserves a Living Wage. We also believe that public sector bodies have responsibilities to ensure a living Wage for all who work for them - either directly or via a contractor.

QUESTION 2: Do you envisage any issues for public sector bodies when including the Living Wage as a contract performance condition of a contract?

No. The only potential difficulty is a challenge under EU procurement rules as explained above, we believe that this is theoretical at best.
QUESTION 3: What do you consider will be the advantages or disadvantages for employers and employees if public sector performance clauses stipulate the payment of the Living Wage?

The Bill would good news for workers, they get higher wages that also improves health and job motivation. Its good for employers because it reduces turnover, improves productivity and attracts better staff through reputational gain.
QUESTION 4: Which public sector bodies should use contract performance clausesto deliver the Living Wage? All of them. The determining factor should be the source of the money being spent - if it is the public pound, it should be being spent to the public good. That should mean a Living Wage regardless of whether the body issuing the contract is a Government department, NDPB, Council, Health Board etc. QUESTION 5: Which bodies should be mandatory consultees?

The bodies consulted should certainly include Trade Unions.

QUESTION 6: What information must be included in the Scottish Ministers report to the Scottish Parliament? We support the suggestions in the Consultation Document Low-pay mapping of Scotland and any conclusions(including type of industry; equality groups and work sectors i.e. private sector); Statistics showing the delivery of the Living Wage and any conclusions (in the public sector, private sector and third sector); Details of any promotional activity undertaken to increase the number of employers paying the Living Wage and outcomes; Any other activities as set out in the strategic plan and whether these were delivered on time and achieved their objectives.

It is important that the report outlines not only what has been done ( or not done) but where this activity fits into the wider economic and social environment.
QUESTION 7: What is your assessment of the likely financial implications of the proposed Bill to you or your organisation; if possible please provide evidence to support your view? What (if any) other significant financial implications are likely to arise?

Making the Living Wage part of public contracts will have a significant impact on the lives of low paid workers. We do not think it will pose an unbearable burden on employers or public finances.
QUESTION 8: Is the proposed Bill likely to have any substantial positive or negative implications for equality? If it is likely to have a substantial negative implication, how might this be minimised or avoided?

We believe the bill will have a significantly positive impact for equality . The majority of those who will benefit from the bill will be women (often employed part time) . The Living Wage will make a valuable contribution to closing the gender pay gap