As the real Living Wage rate increases, how can the sector be supported to pay staff fairly?

Last week the Living Wage Foundation announced the real Living Wage rate would increase by 10% to £12 an hour (£13.15 in London), as inflation and cost-of-living pressure continue to have the biggest impact on low paid workers.

Scotland’s voluntary sector is a major employer - employing over 135,000 people, around 5% of Scotland’s workforce. Fair Work for the sector’s workforce should be a priority, and this includes paying at least the real Living Wage. Our 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.

Encouragingly, recent statistics show a significant reduction in those paid below the real Living Wage in Scotland’s voluntary sector, falling from 13.7% in 2021 to 6.3% in 2022, a welcome development. However, as the sector itself continues to struggle with rising costs how the sector will fund this increase is unclear. The Third Sector Tracker raises concerns that many organisations may be relying on reserves to uplift wages, an unsustainable practice.

SCVO encourages funders to work with organisations to meet at least the real Living Wage rate and accommodate uplifts both to this rate and for other voluntary sector staff; we can’t support people and communities without them!

To support organisations to be Living Wage employers the Scottish Government should lead by example by ensuring that their public sector funding and contracts include annual inflation-based uplifts and accommodate any increases to the real Living Wage as a minimum.

As the Scottish Government begins to apply Fair Work First criteria, including the Living Wage, to public sector grants it is increasingly important for Scottish Government to, frankly, put their money where their mouth is.

Since the 1st of July this year all organisations applying for public sector grants have been 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 Fair Work First criteria 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. Living Wage accredited employers may notice that this criterion differs to Living Wage Scotland’s criteria, which apply to those over 18 and takes a different approach to contracted staff.

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, Fair Work First Guidance.

SCVO believes in the principles of Fair Work, but it must be recognised that the sector faces barriers to implementation due to poor funding practice. 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, 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.

Over the last year and in both Emergency Budget Responses, the Scottish Government has recognised the impact of the cost-of-living crisis on public sector staff and has taken action to provide wage uplifts, particularly for the lowest paid. The Scottish voluntary sector provides many essential services and support, yet despite this, action has not been taken to ensure voluntary sector staff can receive pay increases equal to their public sector counterparts. Shockingly, recent research by CCPS reveals a 20% pay gap between NHS support workers and voluntary sector social care support workers who are starting out in their career.

Offering Fair Work matters to voluntary organisations and organisations in the sector excel on many Fair Work aspects, as shown in the recent research from GCVS and colleagues at Strathclyde University. It’s time for funders, including the Scottish Government, to support the sector to ensure our skilled and experienced staff are paid fairly.

Additional information

The Living Wage rates for 2023-24 were announced in October 2023. Employers have 6 until May 1st to implement the new rates.

To find out more about the Living Wage or become an accredited Living Wage employer visit Living Wage Scotland.

Find out more about Fair Work First.