In work and in poverty

Majority of children in poverty live in working households

More than half of children living in poverty in Scotland are growing up in households where at least one person is in employment – and that number is rising, according to new research published today.

Speaking in a debate in the Scottish Parliament later today, Cabinet Secretary for Fair Work, Skills and Training Roseanna Cunningham will argue that it is unacceptable that work is no longer the straight forward route out of poverty and will reiterate the Scottish Government’s pledge to tackle inequality and build a fairer Scotland.

The Cabinet Secretary is speaking as research published today shows that the proportion of those in in-work poverty is gradually increasing and that for many, moving into work doesn’t necessarily mean moving out of poverty.

Ms Cunningham said: “It cannot be right that the majority of working age adults in poverty in Scotland are in ‘in-work’ poverty. Well-rewarded and sustained employment is the best route out of poverty, for those who are able to work, and one of the best ways to tackle inequality.

“This is why we are prioritising the promotion of the living wage and working closely with the Poverty Alliance to encourage more employers to sign up to the Living Wage accreditation scheme. Business productivity goes hand in hand with fair and equal pay. We must all be fully committed to fair work.”

The Scottish Government is developing a Scottish Business pledge to invite companies to commit to extending the living wage, involve their local communities and invest in youth training and employment. In return businesses will be offered a package of tailored support on skills, innovation and exports to help them grow and prosper.

New research looking at in-work poverty summaries the evidence about the extent and impact of in-work poverty in Scotland. It identifies three key factors that influence in-work poverty – hourly rate of play; number of hours worked by members of the household; income gained and lost through the welfare and tax systems.

The main findings of the research include:

• The majority of working age adults in poverty, 52 per cent, are in in-work poverty and that number is increasing

• For children in poverty, 59 per cent are living in households with someone in employment which can have a profound and lasting impact on children’s outcomes

• In work poverty is costly to society via payment of tax credits and other in work benefits which top up low income

• Having one earner in the household means families may be more at risk of poverty at a time when the average living standard, and hence the relative poverty threshold, is increasingly determined by the living standard of double-earner households

• Low-wage work is a ‘dead end’ for many. Workers who are low paid at any one time are more likely to remain in low pay later in life.

You can view the Summary of Evidence Report at :http://www.scotland.gov.uk/Publications/2015/01/3233

100 up: a wage to live on

100 employers in Scotland now with Living Wage Accreditation

First Minister Nicola Sturgeon yesterday visited Scotland’s 100th Living Wage accredited company, McKean Developments Ltd, to welcome the rapid growth in Scottish organisations securing Living Wage Accreditation.

The Poverty Alliance, which runs the Living Wage Accreditation scheme in Scotland has indicated that more than 100,000 employees of accredited companies are now benefitting from the Living Wage.

Speaking during her visit to McKean Developments the First Minister welcomed the progress being made and urged other companies to sign up, She said: “It is great news that 100 companies are now accredited as Living Wage employers. The Scottish Government fully supports the Living Wage campaign and we recognise the real difference the Living Wage makes to the working people in Scotland.

“The Scottish Government is not able to set pay levels in the private sector, or indeed the wider public sector in Scotland where employees are not covered by our pay policy, however we DO encourage all public, private and third sector organisations to ensure all staff on lower incomes receive a fair level of pay, and we are funding the Poverty Alliance to take forward the accreditation scheme.

“The list of 100 accredited companies clearly demonstrates it is not just big businesses who are providing a fairer deal for their staff but small companies like McKean Developments Ltd which is guaranteeing the living wage for their staff. I would encourage all employers across Scotland to take the lead from the these 100 organisations and give their workers a Living Wage.”

Colin McLean sales and technical manager at McKean Developments Ltd, said: “As a Living Wage Employer it is our belief that our workforce deserve to be paid an honest and decent wage in return for their services. It’s that simple. This, in turn, has helped increased both production capability and morale within our business, leading to increased customer satisfaction and a top quality finished product, not to mention a better quality of life for all of our employees.”

Peter Kelly, Director of the Poverty Alliance, said: “Congratulations to McKean’s on becoming Scotland’s 100th Accredited Living Wage Employer. This is an important milestone for the Living Wage in Scotland. We are delighted that more and more employers are joining the movement for fair pay.

“These employers recognise that paying the Living Wage has benefits for their organisations as well as their employees. We look forward to working with McKeans, and all Scotland’s accredited employers, to ensure that we all benefit from the Living Wage.”

Call to employers: make the living wage your New Year resolution

Campaigners are calling for employers in Scotland to commit to paying the living wage in 2015.

More than 30 Scottish employers signed up to become become accredited Living Wage Employers last month, meaning that all their staff will now be at least £7.85 an hour.

There are now 94 Living Wage Employers in Scotland. Of the 32 new organisations that have joined the accreditation scheme 70% had less than 50 employees and 38% had less than 10 employees. The majority of the newly accredited organisations are private sector companies.

Peter Kelly, Director of the Poverty Alliance, who host the Scottish Living Wage Accreditation Initiative said: “We have seen a significant increase in enquiries from employers about Living Wage accreditation since Living Wage Week at the start of November, when we reported that the number of Living Wage Employers in Scotland had tripled to 60. Since then, an additional 32 Scottish employers have gone on to become accredited, including Digby Brown law firm, Heart of Midlothian football club and An Clachan Café in Glasgow.

“This is great news, especially for those workers that get a pay rise as a result. It is clear that in-work poverty will remain a real problem for thousands of workers in Scotland in 2015, but if more employers commit to paying the living wage we can begin to make a real impact.

“We are here to help and advise employers who wish to be recognized for paying the living wage. We have been overwhelmed by the response from Scottish employers in the last few weeks and look forward to working with many more in 2015. The living wage is a key way of ensuring that more workers have a prosperous New Year.”

Graham Bell, Managing Director of Glasgow-based retailer Guitar, Guitar who also have shops in Edinburgh and Newcastle said: “Our staff are our greatest asset, and the backbone of our company. By moving onto a living wage, we are solidifying our commitment to the well-being of our employees, their families and the future of our local community. It is a move we’re very proud of.”

Newly accredited Strata Cleaning are the first cleaning firm in Scotland to become Living Wage Employers. The company’s Director, Steven Homer, said: “We made a strategic decision at the formation of the business that it would stand out from the majority of cleaning companies by committing to our staff to adopt the Living Wage threshold for all staff employed by us.

“Within the cleaning sector it is common practice for many staff to be paid at the National Minimum Wage. Our business strategy is to provide a specialist cleaning service where our product knowledge, operating skills and a high level of customer service are paramount. We believe that a part of creating this culture within our business from the very outset is to recognise that it is our staff who are the main customer facing element of our business.

“Our many years of experience teaches us that staff who feel they are correctly rewarded will be much more positive and go that extra step in meeting our customer needs. We believe that long term this will be a major business benefit rather than a cost to us.”

Graeme Thomson, a member of staff at Timber Company Group in Dumfries, is directly affected by his employers’ decision to implement the living wage. He said: “I have recently started working with DTCG and already I feel like a valued member of staff. I was recently informed that DTCG have become a living wage employer, consequently this directly affected myself, making a positive contribution to my salary.

“As expected this has been hugely beneficial. At present I am currently saving for a deposit to take my first step on the property ladder. The increase in my wage makes living month to month that little bit easier whilst saving a large portion of my monthly wage. Working for this increased and fairer wage will make a huge difference to me and many others who will now feel more valued at work and encourage working harder.

“Since joining the company I have been encouraged through continuous development to both learn through further education and hands on work experience to better myself and add to my skill set. Moving to a living wage employer is another reason why I feel privileged to have found employment with the Dumfries Timber Company Group”

Colin Cameron , Operations Director, Dumfries Timber Company said: “We firmly believe that signing up to the Living Wage will only benefit the company. By treating your staff with respect, of which paying the Living Wage is only a part, you get a more contented and motivated staff.

“Respect is always a two way thing, and is extremely beneficial to both sides. Low wages was one of the factors that led to the formation of Dumfries Timber Company. Previously, we worked for one of the large national companies and we were constantly frustrated with the wage structure they had in place. When we started Dumfries Timber Company 7 years ago, the members of staff who joined us were immediately paid more than they were before.

“By signing up to the Living Wage, there are added benefits to our Company such as low staff turnover. We believe that, if you treat your staff with respect in other areas as well as salary, there will be an increased awareness of our company.
Signing up to the Living Wage scheme, will also bring benefits when we are looking to recruit new staff.”

The 32 Living Wage Employers who have become accredited in the past month are:

• Aberdeen YMCA
• The Social Enterprise Academy
• Ypeople
• Harper Macleod LLP
• Cutting Edge Engineering Ltd
• Scotwest Credit Union Ltd
• Conveyancing Direct
• Scottish Out of School Care Network
• Gavin Watson Ltd
• Lift Control Ltd
• Digby Brown LLP
• Dumfries Timber Company Ltd
• Energy Action Scotland
• Heart of Midlothian PLC
• ITC Training Academy
• Strata Cleaning Limited
• Animac Vets Ltd
• Muehlhan Surface Protection Limited
• Third Sector Dumfries and Galloway
• Saltire Roofing and Building Ltd
• Scottish Parliament
• An Clachan Cafe
• Scottish Youth Parliament
• Crannoch Residential Child Care Resource Ltd.
• Village Vets
• GuitarGuitar
• Neil Findlay MSP
• The Spark
• Nutrend Office Furniture
• Trade Right International CIC
• teclan ltd Digital Marketing
• The Royal Bank of Scotland

A full list of all Scottish Living Wage Employers is available at:

www.scottishlivingwage.org/accreditation/which_employers_are_paying_the_living_wage

Living wage: there's nae other team to compare to the Hearts!

Heart of Midlothian have scored with anti-poverty campaigners after the Gorgie team became the first football club in Scotland to pay all staff the living wage.

The decision will see all club employees paid at least £7.85 per hour – £1.35 more than the national minimum wage.

Hearts currently top their league by a wide margin and a return to the top flight at the first time of asking looks inevitable. Off the park, the club is doing things right too – and with their profile sky high it’s hoped that where Hearts lead, others will follow.

The Scottish Living Wage Accreditation Initiative was launched in April to provides support and advice to organisations. It’s delivered by The Poverty Alliance, and director Peter Kelly has welcomed Hearts’ initiative. He said: “Almost two in three children in poverty in Scotland live in a household where someone works, and the living wage is a vital tool in lifting people out of in work poverty.

“Football clubs have an important role in communities across Scotland. With thousands of people turning out every week to support their local clubs, they can play an important leadership role, not only for fans but for the businesses they work with.

“I hope that more clubs will follow Heart of Midlothian’s example but not only giving their staff a pay rise this Christmas, but by showing real leadership on this issue on and off the pitch.”

A Heart of Midlothian spokesperson said the move was in keeping with the club’s values. “Heart of Midlothian Football Club is delighted to be given accreditation to become a living wage employer.

“The club feels that implementing the living wage is entirely in keeping with the values that we hold dear as Edinburgh’s oldest football club. Since revealing our intention to implement the living wage the club has received widespread backing from both our supporters and sponsors.”

More than 70 employers are now accredited as paying the living wage, but there’s a long way to go – in Scotland, it’s estimated that at least 414,000 workers are currently paid below the living wage.

GMB call for increase of £1 an hour

‘Members across Scotland say that in their experience you need at least £10 an hour and a full working week to have a decent life free from benefits and tax credits’ – GMB Scotland

GMB Scotland is calling for an increase of £1 per hour towards the GMB Congress target of a living wage of at least £10 per hour.

The items in the trade union’s claim, submitted to Cosla last Friday, are: £1 an hour increase on all hourly rates of pay, consolidation of living wage supplements and the removal of all pay points below the living wage pay level. The next review of pay is 1 April 2015.

GMB Scotland launched the pay campaign with photo calls at ten locations across Scotland, with GMB members employed by Scottish local authorities holding up large replica of a £1 coin

Alex McLuckie, GMB Scotland’s Senior Organiser, said: “GMB is kicking off this campaign for Scottish local council workers to receive a £1 an hour increase on their basic salary from April 2015. This is a step towards the target of a living wage of £10 per hour set by GMB Congress in 2014.

“GMB members across Scotland say that in their experience you need at least £10 an hour and a full working week to have a decent life free from benefits and tax credits. Less than £10 an hour means just existing not living. It means a life of isolation, unable to socialise. It means a life of constant anxiety over paying bills and of borrowing from friends, family and pay day loan sharks just to make ends meet.

“Many of our members provide vital frontline services and while these jobs are crucial to many of Scotland’s councils, the people providing these services are some of the lowest of paid.

“Over the years Scotland’s council workers have either received a minimal pay rise or no pay rise at all. Further to this many GMB members may have suffered a cut in earnings through hours being reduced, while at the same time having their workload increased with staff leaving without being replaced.

“With the reality of low pay and increasing workloads, coupled with the vital services which our members provide for Scotland’s councils, GMB Scotland believe £1 an hour rise on all basic salaries is a way of acknowledging the work done by Scotland’s council workers.”

One in five paid less than Living Wage

More than a fifth of UK workers earn less than the living wage, according to a new report published today. The KPMG research says that bar and catering staff, care workers and shop assistants are among those most likely to live ‘hand to mouth’ because of low pay.

The report is published on the day new ‘living wage’ rates – the minimum pay rates needed to let workers lead a decent life – are published.

Some 5.28 million people are paid less than the Living Wage, according to KPMG. The latest figure indicates that 22 percent of employees now earn less than the Living Wage – up from 21 percent last year.

Although the rise sounds modest, in real terms it equates to 147,000 people. The data also belies a worrying trend which sees part-time, female and young workers as the most likely to earn a wage that fails to provide a basic but decent standard of living.

The research, conducted by Markit for KPMG, shows that the proportion of people earning less than £7.65 per hour (or £8.80 in London) is much higher amongst part-time workers. More than 4 in 10 (43 percent) take home less than the Living Wage, compared to 13 percent of full-time employees. Despite accounting for less than one-third of all UK jobs, there are also more part-time roles paying less than the Living Wage (2.98 million) than full-time jobs (2.29 million).

More than forty years after the first Sex Discrimination Act was passed, the research also finds that women are more likely to be paid below the Living Wage than men. This year’s data shows, for example, that 1 in 4 women earn less than the benchmark, compared to 16 percent of men. It’s a figure that has stagnated over the past 12 months. Even where wages have increased, men earning less than the Living Wage have been awarded an average 3 percent increase, compared to 2.7 percent for women.

Although the number of young unemployed continues to fall, it is clear from analysis of the data that younger workers remain the most likely group to be caught in the ‘working poverty’ trap. 72 percent of 18-21 year olds are currently earning less than the Living Wage, compared to just 15 percent of those aged 30-39. In real terms this equates to 1,175,000 employees of traditional university age failing to earn enough to support the purchase of basic necessities.

Mike Kelly, Head of Living Wage at KPMG, says: “Although there are almost 1,000 organisations pledged to pay a Living Wage, far too many UK employees are stuck in the spiral of low pay. With the cost of living still high the squeeze on household finances remains acute, meaning that the reality for many is that they are forced to live hand to mouth.

“Inflation may be easing, but unless wages rise we will continue to see huge swathes of people caught between the desire to contribute to society and the inability to afford to do so. For some time it was easy for businesses to hide behind the argument that increased wages hit their bottom line, but there is ample evidence to suggest the opposite – in the shape of higher retention and higher productivity. It may not be possible for every business, but it is certainly not impossible to explore the feasibility of paying a Living Wage.”

This year’s research also revealed that, during October 2014, almost three times as many people earning less than the Living Wage (29 percent) reported that their household finances worsened over the month, compared to just 10 percent who saw an improvement. The net effect has seen demand for unsecured credit rising, with twice as many people earning below the Living Wage (18 percent) reporting an increase in their need to borrow, compared to just 9 percent who signalled a reduction.

This pressure on finances is also something many people believe will last beyond the short-term. 35 percent of those earning less than the Living Wage expect to see household finances worsen between now and November 2015. 22 percent also report fears over job security – a figure that has remained unchanged, despite improvements to the wider economy.

The Rt Hon Alan Milburn, chair of the Social Mobility and Child Poverty Commission said: “This research is further proof that more workers are getting stuck in low paid work with little opportunity for progression.

“It is welcome that the number of accredited Living Wage firms has increased. But far more needs to be done to help millions of people move from low pay to living pay. Employers and government both have a key role to play. With the right leadership Britain can become a Living Wage country over the next decade.”

THE LIVING WAGE: what is it?

The UK ‘living wage’ – an hourly rate based on the amount needed to cover the basic costs of living – has today been raised by 20p to £7.85. The new rate – set by the Living Wage Foundation – is now 21% higher than the compulsory National Minimum Wage, which is currently £6.50 an hour.

The living wage has been adopted by more than 1,000 employers across the country, benefiting 35,000 workers, but business groups have said employers might struggle to pay it. The living wage is currently an informal benchmark, a voluntary option for employers and not a legally enforceable minimum level of pay like the national minimum wage.

The national minimum wage is set by the chancellor each year on the advice of the Low Pay Commission and is enforced by HM Revenue & Customs (HMRC).

The national living wage is currently calculated by the Centre for Research in Social Policy at Loughborough University but the living wage in London has been calculated by the Greater London Authority since 2005. The new rate in London will rise from £8.80 an hour to £9.15, London Mayor Boris Johnson has announced.

Call for ‘living wage’ if Scotland says ‘YES’

An expert group on welfare set up by the Scottish government has recommended a substantial rise in the minimum wage. It said the rate received by the lowest paid should go up by more than £1 per hour if Scotland votes for independence.

The recommendation from the Scottish government’s advisory group was that the minimum wage should match the ‘living wage’ within five years of independence – a rise from £6.31 to £7.65 per hour.

Responding to the latest report, Deputy First Minister Nicola Sturgeon said support to get people into work, action to make work pay and the provision of a strong and decent safety net for those who are unable to work should be the focus of the welfare system in an independent Scotland.

The independent Expert Working Group on Welfare’s second report outlines a vision for a fairer, simpler and more personal welfare system and provides nearly 40 recommendations for change following independence.

The Deputy First Minister confirmed that in an independent Scotland the current government would take forward recommendations, including those to improve support for carers, restore the link between benefits, tax credits and the cost of living and abolish the current Work Capability Assessment.

She also confirmed that the Scottish Government would carefully consider the Group’s recommendations on the minimum and living wage, introduction of a new Social Security Allowance and replacement of the Work Programme with more targeted support to help people find and sustain employment.

Ms Sturgeon said: “I warmly welcome the independent Expert Working Group’s report and thank the members for their significant contribution. The Group’s report includes a wide ranging package of recommendations which would help us create a welfare system in an independent Scotland that better meets our needs.

“As part of their discussions, the Group have engaged with a wide range of people and organisations. It is clear they have listened closely not only to how people feel about welfare, but also how the current reforms are affecting their lives.

“In particular, I strongly endorse the Group’s view that the welfare system should act as a strong safety net and a springboard to a better life. They are right when they say that work should be the best route out of poverty for most people but that the rise in in-work poverty needs to be addressed if this is to be the reality.

“Following a vote for independence, we would be committed to taking on several recommendations straight away to deal with those aspects of the current system that are pushing so many people into poverty.”

The Government would:

• Increase Carers’ Allowance to £72.40 per week, the same rate as Jobseeker’s Allowance for those aged 25 or over. This would amount to an extra £575 a year for the 102,000 people in Scotland who are eligible to claim the allowance.

• Re-establish the link between benefits and the cost of living, with benefits and tax credits being increased each year by the Consumer Prices Index of inflation.

• Abolish the ‘Bedroom Tax’.

• Replace the current system of sanctions with one that is fairer, more personalised and positive.

• Abolish the current Work Capability Assessment that determines the ability to work of the sick and disabled.

• Establish a National Convention on Social Security at the start of 2015.

The Government will also carefully consider the Group’s other recommendations. These include:

• Increasing the National Minimum Wage to equal the Living Wage and with reductions in Employers’ National Insurance contributions to help businesses make this transition.

• Replacement of the Work Programme with new initiatives developed in partnership with those out of work to help them find, and stay in, employment.

• Introducing a new Social Security Allowance that would bring together existing benefits but which would exclude Housing Benefit.

• Better supporting those with long-term disabilities and illness into work.

The Deputy First Minister added: “We are committed to mitigating the harmful effects of Westminster’s welfare reforms where we can, such as securing the transfer of powers over discretionary housing payments to the Scottish Government, allowing us to help people struggling with the Bedroom Tax.

“The report recognises the increased pressures of in work poverty and some of the difficulties in the current labour market. These are challenges all countries face but we are committed to tackling them head on wherever possible. The growing numbers of people in work but still facing poverty is extremely worrying. They need our support and one way to do this, as the Group suggests, would be through making the Living Wage the National Minimum Wage. We will be looking closely at this proposal.

“We will be considering the Group’s recommendations to replace the Work Programme with more innovative, locally-based schemes, designed to help people find jobs and, importantly, stay in work.

“We will also look at the introduction of a new Social Security Allowance, but would keep Housing Benefit separate from this.

“Our focus will be on prevention rather than dealing with existing symptoms, to develop a society that not only provides fair support and decent opportunities for all but also protects the vulnerable in our society. The only way to guarantee that is to have the powers to deliver progressive reform of the Welfare State – only with independence will we have the opportunity to create a welfare system that is fairer and works for all the people of Scotland.”

However Scottish Lib Dem leader Willie Rennie said people who expected big changes to welfare after independence would be “disappointed” by the report, while Labour maintains that being part of the bigger UK economy offers greater financial security. Scottish Labour’s Jackie Baillie said: “Once again we have uncosted promises from the SNP. You can’t have more generous welfare at the same time as you are cutting taxes – it simply doesn’t add up”.

Local MP backs Living Wage

This is Living Wage Week and Mark Lazarowicz MP has backed Labour’s plans to raise wages for thousands of low-paid workers in Edinburgh.

If the party wins power at the next General Election, Labour says it will introduce new tax breaks for employers that commit to paying the living wage – currently set at £7.65 in Scotland. As well as making sure work really pays, it will also help cut benefit bills through savings in lower tax credits and benefit payments.

The North and Leith MP (pictured below) said: “In-work poverty has risen sharply so that many families that are being forced to turn to food banks or take out pay-day loans actually have a wage coming in. It is simply wrong that almost 60% of children in poverty in the UK come from households where at least one person is working.

“I know there are already councils like the City Council here in Edinburgh and private employers as well who are doing the right thing by their staff and paying the living wage. I strongly support Ed Miliband’s plans to encourage more employers to do the same so that hard-working staff are treated decently and paid a fair wage.”

As well as the City of Edinburgh Council, Fife, East Lothian, Falkirk and Scottish Borders Councils have also committed to paying the living wage.

Under Labour’s plans, firms that commit to paying their employees the living wage in the first year of the next Parliament will be offered a 12 month tax rebate of up to £1,000 for each individual worker that receives a pay rise. The money would be funded directly from increased income tax and National Insurance revenues.

Port of Leith signs up to Living Wage scheme

Port of Leith Housing Association has committed to setting its basic starting salary level at the national Living Wage standard of £7.45 per hour – 20% above the current minimum wage level set by the UK Government.

The Association has committed to the voluntary scheme run by the Living Wage Foundation in which living wage level is calculated by the Centre for Research in Social Policy according to the basic cost of living in the UK, with the hourly rate updated annually.

Research has shown that the Living Wage benefits both organisations and individuals. An independent study revealed that more than 80% of employers believe that the Living Wage had enhanced the quality of the work of their staff, while absenteeism had fallen by approximately 25%.

And half of employees felt that the Living Wage had made them more willing to implement changes in their working practices, enabled them to require fewer concessions to effect change and made them more likely to adopt changes more quickly.

Keith Anderson, Chief Executive of Port of Leith Housing Association, said: “Signing up to the Living Wage scheme is a win-win situation. We firmly believe in being a responsible employer and supporting our staff is a key priority. Signing up the scheme shows that we are committed to each every one of our employees.”