Organisations seeking public sector grants to pay real Living Wage and provide effective workers’ voice from 1 July 2023

From the 1^st of July 2023 all recipients of public sector grants will be required to pay at least the real Living Wage and provide effective workers’ voice as a minimum standard. These changes are part of the Scottish Government’s commitment to become a Fair Work Nation by 2025.

The real Living Wage criteria will apply to all UK-based staff aged 16 and over, including apprentices, who are directly employed by the grant recipient. Any UK-based workers who are not directly employed but are directly engaged in delivering the grant-funded activity, whether they be sub-contractors or agency staff, must also be paid at least the real Living Wage.

Similarly, before organisations can access a grant, all those with a workforce must be able to demonstrate, that all workers employed within that organisation, including agency workers, have access to effective voice channels, and that voice exists at both collective and individual levels.

Details of both criteria and wider Fair Work commitments are available in the Scottish Government’s recently published, Fair Work First Guidance.

Fair Work has been a Scottish Government priority since 2016. The Scottish Government consulted on Becoming a Fair Work Nation in December 2021. More recently a refreshed Fair Work Action Plan was released in December 2022, followed by the release of the Fair Work First guidance in March 2023. The guidance will be implemented from the 1^st of July 2023, just a few short months away, an implementation date that SCVO has challenged.

Since responding to the Fair Work Nation consultation in 2021, SCVO has been calling on Scottish Government to engage with the sector on their Fair Work plans and to recognise that many organisations may need support to understand and adapt to becoming Fair Work employers.

SCVO agrees that Fair Work for Scotland’s voluntary sector workforce should be a priority.  Last year’s Living Wage Foundation report, All Work and Low Pay, found that 12.5% of jobs in the voluntary sector in Scotland pay below the real Living Wage. The voluntary sector workforce makes a huge contribution across Scotland, offering a lifeline to people, families, and communities as the cost-of-living crisis bites. This lifeline shouldn’t need to be extended to voluntary sector staff, who deserve the real Living Wage. But that’s easier said than done.

Over the last year we have repeatedly called on the Scottish Government to support our sector with uplifts to ensure voluntary organisations receiving public sector grants and contracts can pay the real Living Wage, meet the new Living Wage rate (which due to rising inflation increased by 10.1% last year, the largest year-on-year rise), and uplift staff wages more broadly.

We have explained that years of under-funding, followed by Covid 19, and the running costs crisis, mean that for many voluntary sector employers, paying the Living Wage and addressing the knock-on effect this increase could have on other salaries, cannot be achieved without additional resources. Our calls have not yet been met by a commitment, however, we continue to believe that the Scottish Government and their coalition partners, the Scottish Greens, should lead by example by ensuring grants and contracts accommodate at least the real Living Wage.

We have highlighted that in both Emergency Budget Responses last year the Scottish Government recognised the impact of the cost-of-living crisis on public sector staff and took action to provide wage uplifts, particularly for the lowest paid. The Scottish voluntary sector provides many similar essential services and support, yet action has not been taken to ensure voluntary sector staff can receive pay increases equal to their public sector counterparts, contributing to 20% pay gap between NHS support workers and third sector social care support workers. Just one example of the unfair voluntary sector funding environment.

Fair Funding is central to the Scottish Government’s Fair Work ambitions. Existing funding and procurement practices undermine aspirations to offer secure work and must be addressed if the Scottish Government’s Fair Work aspirations are to become a reality for the sector’s 135,000 employees. A Fair Funding approach which addresses short-term funding cycles and ingrained operational issues, including delayed decision-making, and poor communication, is central to realising Fair Work and offering security to organisations across the voluntary sector, their staff, volunteers, and the communities they work with.

SCVO will continue to stress that meaningful engagement with the voluntary sector is needed to ensure the sector has the support it needs to implement the Scottish Government’s Fair Work ambitions and Fair Work First criteria. Our sector is hugely diverse, to realise Fair Work engagement with a wide range of organisations is crucial to ensure that policies can be implemented without unintended consequences for the organisations, staff, and volunteers who play an essential role in Scotland’s society and economy.