20 Feb 2015
At its first meeting of 2015, Glasgow Chamber’s governing council decided that the Chamber should consider its position on the Living Wage. To date we have made no commitment to support the Living Wage given the breadth and diversity of our membership. During the toughest phases of the financial and economic crisis we’ve taken unemployment, especially youth unemployment, as the most important labour market issue to tackle - and we still do.
However Councillor Gordon Matheson made a firm case at the State of the City Economy Conference back in November that it was in all of our interests to tackle poverty in Glasgow, that in-work poverty is relatively substantial and that the Living Wage was at least one measure that would help. A review of the scale and nature of in work poverty in Glasgow entitled Hard Work Hard Times estimates that 1 person in every 12 of the city’s population is experiencing in-work poverty. These people are working, but they’re struggling to cope. Of those being paid less than the Living Wage, which currently sits at £7.85 per hour, one third said they were having difficulty getting by.
The national Minimum Wage is £6.50 per hour for someone aged 21 and over. So for those businesses paying the Minimum Wage, making a move to the Living Wage could involve as much as a 20% increase in the wage cost for each individual involved. Some sectors rely on elementary jobs paying the Minimum Wage to a much greater extent than others, with Hard Work Hard Times specifying hotels, restaurants, wholesale and retail as having the highest incidence of in-work poverty in Glasgow.
For some businesses where wages are a major cost making the move to the Living Wage could be very difficult. And economic conditions are still not yet wholly benign, with the Scottish Retail Consortium, for example, reporting that results for shops in January 2015 are not especially bright.
So the Chamber has committed to a careful review of the issues, to understand the impact that the Living Wage could have both on the city’s economy and on individual businesses. We have begun examining the case for the Living Wage and the complications involved in applying it. We know that there are Chamber members who have already signed up to it because they believe it is part of the ethos of the company, demonstrating a commitment to the wellbeing of their staff.
We’re sure that almost all employers would want to reward staff well, but we are aware that there are companies for which the Living Wage is far from straightforward. So there are many questions we will be asking of our members in the review. Some of those questions will reflect the challenges involved for some companies. For example, just how significant a cost increase might be involved for those sectors where many employees are on or near the Minimum Wage? What impact might there be on pay for those already being paid the Living Wage but for whom wage differentials are important? What impact might there be on the wider reward package like pensions, bonuses, staff discount schemes and career development training?
But equally we want to understand the positive case for the Living Wage. What benefits do the companies already committed to it see? How has it affected their performance or their ability to attract and hold on to talent? What would the economic impact be on the city? Would it boost demand ?
Now of course the Living Wage is not a statutory requirement. It is voluntary. But we also want to understand what the impact of the introduction of the Minimum Wage was after it passed into law in 1998. There is a lot for us to think about. Please tell us your views.