Living Wage

Mark Lazarowicz Excerpts

Thursday 6th November 2014 Commons Chamber

[Chris White]

I agree wholeheartedly with some of my hon. Friend’s points, and I thank him for being such a strong advocate of the living wage.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

I am glad that the hon. Gentleman has brought forward this debate today, along with other colleagues. But we must get real. It is also a fact that under the Government whom he supports, the number of people below the living wage has risen from 3.4 million to 4.9 million in this country, so we need to think how to move forward. Does he agree that we need to get to a situation where every worker employed by Government or local government, or contracted to Government or local government, should be paid at the very least the living wage?

--- Later in debate ---

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

It is a pleasure to follow the thoughtful contribution from the hon. Member for Newark (Robert Jenrick).

I congratulate the hon. Member for Warwick and Leamington (Chris White) on securing the debate. Like other Members, I am pleased that we are able to engage in it during national living wage week. I also welcome research findings that were published earlier this week by KPMG, documenting the extent and scale of poverty pay across the United Kingdom. In-work poverty is one of the biggest challenges that we face, and the knock-on impacts of low pay are a major factor in rising levels of child poverty and growing inequality. A large number of people in my constituency work in low-paid jobs, so I read KPMG’s report with great interest. It states that about 414,000 workers in Scotland are currently paid less than the living wage—about 19% of the work force.

Just under two thirds of those people are women—an issue that needs to be much further to the fore in this debate. We cannot tackle the problem of low pay without understanding the reasons why women are significantly more likely than men to be earning less than the living wage. The report contains a paragraph that notes the gender differentials in relation to low pay, but it does not offer any detailed analysis. We know that there is still a substantial pay gap between women and men throughout the labour market, not just in low-paid occupations. Arguably, however, the consequences are more acute at the low-paid end of the income spectrum, and have more detrimental knock-on social impacts.

In my view, the disproportionate number of women who earn less than a living wage is only partly attributable to the greater number of women who work part time. It is also due to persistent tendencies towards occupational segregation in certain job sectors. Lower-paid jobs in, for instance, catering, cleaning and cashiering are disproportionately taken by women. Some of those jobs are also in sectors in which there has been a huge drift towards zero-hours contracts in recent years. It tends to be women who take on responsibility as primary carers for dependants, which can also limit their availability, mobility and flexibility at work. All that is before we even think about the under-employment of women in the work place. Obviously, the issue of gender inequality is much wider than the scope of today's debate, but it is clearly both a driver and a consequence of low pay, and we need to take it much more seriously.

Many low-paid workers are in the service sector, and the vast majority are in private sector jobs. Left to its own devices, the market tends not to ensure that those workers receive adequate wages. If the Government are really serious about ending poverty pay, they need to consider how they can move the minimum wage towards a living wage. Legislating for a minimum wage that actually reflects the cost of living, and actually makes work pay, is the single most important thing they could do to tackle the problems associated with low pay.

The truth is that the minimum wage has not risen in real terms in nearly a decade, and every year since 2008 it has failed to keep pace with the cost of living. Had it done so, those in minimum wage jobs would have been more than £600 a year better off. If the living wage rises in line with projected rises in the consumer prices index, it will reach £8.57 an hour by 2019. We need to be realistic about that and more ambitious in ensuring that the minimum wage genuinely makes work pay for people. Let us make no mistake: we have heard proposals in recent weeks from the Labour party about raising the minimum wage to £8 an hour by 2020, but that is a pretty feeble increase, which will leave millions of people in poverty pay, below the living wage.

I would like to see responsibility for employment policy, including the minimum wage, devolved to the Scottish Parliament as part of the Smith commission process. I therefore ask the Minister to outline the Government’s view on that in his response to the debate. The Scottish Government are the only Government in the UK who have made a living wage an integral part of their public sector pay policy. They have ensured a living wage of £7.65 an hour for all direct employees across all Departments, and during the recent years of pay restraint they have ensured a minimum pay rise of £300 for those earning less than £21,000 per annum. I welcome the news that this will rise to £7.85 an hour in next year’s pay awards, in line with this week’s announcement.

There was some discussion earlier about challenges in respect of contracts that Governments issue to other suppliers, and there are constraints from existing legislation in other areas, including EU law.

[Mark Lazarowicz]

I respect what the hon. Lady’s party has done on this issue. In my local council, the Labour-Scottish National party administration together have adopted a living wage in Edinburgh. There are obviously legal arguments about what can be done, but the Scottish Government should do more on the issue of workers employed on contracts for which they are responsible. We have done something, but so far only 50 have actually improved. We must try to get agreement across the parties. A lot more needs to be done for these people, many of whom are among the lowest paid in the country.

[Dr Whiteford]

I thank the hon. Gentleman for his intervention. Steps have been taken, and the launch of a fair work convention in Scotland in the last few weeks shows one way forward. On contracts, the Scottish Government have also at an early stage been encouraging procurement to take account not just of pay, but of other conditions. Councils that have faced the same legal constraints have been working to try to ensure this is built into contracts, and I believe some UK Government Departments, including the Department of Energy and Climate Change, have taken a similar approach in the absence of a mandatory process, trying to encourage suppliers to meet living wages for those workers.

Given that 93% of low paid workers are working for private sector employers, it is heartening to see increased numbers of employers signing up to the living wage accreditation scheme. In Scotland, the Poverty Alliance has been promoting take-up of the scheme and has succeeded in trebling the number of accredited employers over the last six months. However, there is scope for a lot more action on that front.

As has been said, there is a strong business case for private sector employers paying a living wage. As the authors of the KPMG report point out, the improvement in staff retention and morale associated with decent wages can easily outweigh any increase in the wage bill, and consequently can have a positive impact on productivity and help reduce business costs.

There is a fundamental dignity in having the living wage—a fair day’s pay for a fair day’s work. Conversely, something has gone very wrong in our economy when people who are working long hours in sometimes physically demanding jobs are simply not earning enough to support themselves or their children. The Government must explore how they can bring the minimum wage up to a more realistic level—towards a living wage—and we also need to tackle the underlying inequalities that perpetuate poverty pay.