Scotland the Blog: a minimum or a living? How wage floors are changing for Scotland and beyond

On 21st January I attended a major event on the living wage at KPMG's HQ in Glasgow. A new research report Living Wage Employers: The Business Case by Dr Andrea Coulson James Bonner from Strathclyde Business School, was the centrepiece. Strathclyde is at the forefront of the progressive workplace agenda and this intervention on the finance and reward side is in addition to the work on employment relations and work design.

Scotland's Economy and Finance Minister John Swinney outlined the government's belief that the LW would help to boost engagement and productivity and lift the ambition and aspiration of many Scottish companies. He was anxious to point out that the government would not be "finger wagging" but opening a dialogue with employers. Some sectors notably hospitality and retail, are sceptical that such a policy can be adopted wholesale because of the diversity in both size and profitability within their industries. The same arguments were made about the National Minimum Wage (NMW).

>The National Minimum Wage has now lost as much of its value since 2008, over £1,000 in real inflation adjusted terms

I was working in a petrol station at the time as a student studying among other things Labour market economics and the franchise owner suggested that he would have to close if he had to pay it. One of his arguments was 'look you work for me for £3.10, why am I going to pay you £3.60? My cost will go through the roof'. He also wondered what he would have to pay his handyman who did all sorts of skilled trades for him across his two sites and was paid a bit more than us cashiers. That's a real issue skilled workers want to maintain differentials and there is an impact but it can be managed with union support.  These are the two principal reasons for employers to baulk at boosting wages.  But my old temporary boss was not a heartless Dickensian tightwad, he was quite a decent man as was the boss of the pub I also worked in part time. (How I managed to study is a miracle but I used to do 12 hour days on the railway). The NMW has now lost as much of its value since 2008 (over £1,000 in real (inflation adjusted) terms) which even has the austerity chancellor aspiring to a £7 rate.

The debate has now moved on from the minimum wage which is effectively the subsistence wage towards the more challenging concept of a Living Wage. Many employers at the top of the reward pyramid such as Barclays, Aviva KPMG, SSE and others are driving it through their contractors for services like cleaning catering and security. Those within traditionally low paid sectors who want to shape a different business mode of engagement and service excellence such as Penrose Care and Enhance office cleaning, have adopted it. There are objections from many including the economists who predicted that the NMW would lead to mass unemployment for the unskilled.  But the case is building and we will be discussing it through our emerging policy and research networks. We are looking to develop a Scotland knowledge Exchange Network event soon on the issue. Watch this space.

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