Meeting of the Parliament 01 March 2012
I regret anything that takes away from service provision. The raison d’être for any local authority is service provision, and that must come first.
The harsh political reality is that, in these challenging economic times, taxpayers’ money is being used to pay public sector workers an hourly rate that most small and medium-sized enterprises and third and voluntary sector organisations have no realistic prospect of affording. That results in an even greater pay premium for public sector employees.
An analysis of the evidence that was presented to the committee revealed that nearly 550,000 people in Scotland earn below the living wage. Some witnesses argued that the introduction of the living wage helps local authorities to retain staff by lowering staff turnover rates, that it reduces sickness absence and that it has helped to alleviate poverty. Others disagreed and stated that there was no evidence that staff retention or improvements in sickness absence were directly attributable to the payment of the living wage rather than to, for example, the current economic circumstances. Furthermore, it was argued that, rather than helping to alleviate in-work poverty for the lowest paid, the introduction of the living wage merely replaced benefits that were previously paid by the UK Treasury.
Business representatives expressed concern about the potential consequences of adopting the living wage. The Federation of Small Businesses said in its submission:
“the uplift from minimum to living wage costs, including employer NIC contributions, represents a 20% increase to the cost of paying any minimum wage employee.”
Furthermore, it said:
“this increase would hit small businesses harder than larger businesses which would be able to offset increases in the wage bill by cross subsidy or savings elsewhere.”