Would you pay more tax so everyone can earn a living wage?

The Scottish Government’s 2012 guarantee to pay the living wage to all its directly employed staff was a major commitment, which sends a very strong signal about how it values Scotland’s lowest paid public sector workers. A wage that secures a minimum standard of living is not, by any stretch of the imagination, a king’s ransom. With the cost of basics such as food, heating and rent all rising above inflation, being paid £7.65 per hour will not eliminate the reality of very hard spending choices for many people. What’s more, the government’s living wage commitment applies only to those it directly employs. It does not automatically secure a living wage guarantee for all public sector staff or those working in the third sector. Given the benefits of the living wage, could such a guarantee be extended to all of Scotland’s low-paid workers? Should the minimum wage be further increased above the current £7.65 per hour rate? With Scotland having to come to terms with increasingly scarce public finances, to answer yes to both questions will not be easy. Nonetheless, with effective leadership and innovation, the third sector can do its part. Independence wouldn’t guarantee more to spend on public services Cutting the level of debt continues to be a key aim of the UK coalition government. This target is also accepted by the Labour party and the SNP (it is the speed and depth of the cuts that are not universally agreed on). With this aim comes fiscal austerity and that means cutting what we spend on public services to reduce annual borrowing requirements and cumulative UK debt to ’sustainable’ levels. An independent Scotland would look to rely on oil revenues as an alternative to the block grant funding secured under the Barnett formula. However, given the current outlook for North Sea tax revenues, there is no certainty that such a scenario would offer more to spend on public services. Indeed, if an oil fund is to be established, and efficiencies elsewhere not found, there could well be less to spend on current services. Doing things differently To provide a higher living wage for more of Scotland’s low-paid workers under such austerity measures means doing things differently. Working practices have to change. Without above-trend growth in productivity to generate additional taxes and efficiency savings, those who have secured higher rewards (particularly on pay and pension entitlements) may have to relinquish some of these for the benefit of many more, or accept the need to pay higher taxes. The third sector faces serious financial challenges. Securing the living wage for all its front-line staff at the same time as local authority payments are falling and reserves are fast disappearing, will not be easy to achieve. Generating much needed efficiency savings to free up resources to pay the living wage must also not endanger quality (that is not an efficiency saving). There are increasing examples from within the sector, however, where delivering more with less income is possible. Securing the living wage fits well with the Scottish Government’s aim of increased equality. The third sector has not only a growing need for, but also the capacity to deliver its part, even in these financially difficult times.