The Scottish economy would receive an £89 million annual boost if just a quarter of low-paid workers earned a “real” Living Wage, a new report says.
Scotland’s four largest cities would derive the most benefit, with the local economies in Glasgow, Edinburgh, Aberdeen and Dundee gaining nearly £30m, £7m, £3m and £1.8m respectively, it adds.
The report highlights the findings of research by the Living Wage Foundation (LWF), which is at the heart of a UK-wide fair pay campaign, and public policy think-tank the Smith Institute.
Scotland’s workers and families need jobs that meet their everyday needs and allow them to thrive.”
Graham Griffiths, director, Living Wage Foundation.
Raising the earnings of one-quarter of Britain’s lowest-paid workers to the “real” Living Wage rate of £9.50 an hour – higher than the UK Government’s National Living Wage rate £8.91 – would secure an average annual increase of £520, the report says.
The higher “real” rate is calculated annually by another think-tank, the Resolution Foundation, and overseen by the Living Wage Commission, representing employers, trade unions, and independent experts, among others.
Why the difference?
The government’s rate is based on median earnings, while the “real” measure is linked to the cost of living.
LWF is calling for a greater focus on improving wages in order to drive an economic recovery at both national and local levels.
Scotland has the lowest proportion of employee jobs paid below the “real” Living Wage, at 15.2%.
But this means around 350,000 people north of the border are still unable to meet their everyday needs, the LWF-Smith Institute report suggests.
Too many workers across Scotland are in the grip of in-work poverty.”
Peter Kelly, director, The Poverty Alliance.
LWF director Graham Griffiths said: “Everyone in Scotland and throughout the UK has been affected during the crisis.
“The real Living Wage offers a clear way to now recover and rebuild with stronger foundations – making Scotland’s economy even more vibrant and productive than before the pandemic, while also ensuring the country’s low paid aren’t left behind.
“Scotland’s workers and families need jobs that meet their everyday needs and allow them to thrive, while its’ businesses need healthy and motivated workers unburdened by the stress of low pay – and local consumers with sufficient wages to stimulate economic growth.
“The Living Wage provides all of this and more and must now be a priority for those looking to revitalise the Scottish economy through and beyond the pandemic”.
Growth dividend
Smith Institute deputy director Paul Hunter said: “The Living Wage not only transforms the lives of low-paid workers and improves business performance, but also provides a growth dividend for local economies.
“As we exit the worst of the pandemic, increased Living Wage coverage can boost spending and support a wage-led recovery in our towns and cities.”
LWF has called on civic leaders to develop action groups to drive “real” Living Wage take-up and integrate commitments to it into their economic development strategies.
‘Good for workers and good for business’
Peter Kelly, director of The Poverty Alliance, Scotland’s anti-poverty network, said: “Too many workers across Scotland are in the grip of in-work poverty.
“The real Living Wage can loosen that grip.
“We know that the real Living Wage is good for workers and good for business, and new evidence suggests significant financial gains for local economies too.
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“We encourage more employers to engage with our Living Wage Scotland programme on becoming accredited as Living Wage employers, and we encourage key local institutions to consider ways they can do more to ensure decent pay and conditions are at the heart of their local labour market.”