Close the Gap Consultation Response

7/29/2019 Close the Gap Consultation Response

1/6

Close the Gap response to Living Wage (Scotland) BillDecember 2012

1

Close the Gap response to the Living Wage (Scotland) Bill consultation

1. Introduction

Close the Gap is a partnership project which works across Scotland on issues

around women and the labour market. Partners include the Scottish Government,

Scottish Enterprise, Scottish Trades Union Congress (STUC), Skills Development

Scotland, and Equality and Human Rights Commission (EHRC).

Close the Gap works with employers, economic development agencies, sectoral

representative bodies, and employees. The breadth of partnership reflects the

fact that equal pay is a productivity issue as well as an issue of equality, and that

narrowing the gender pay gap would enhance the productivity of the Scottish

economy.

In order to meet the deadline, this response has not been seen by the Close the

Gap steering group, and as such should be treated as confidential. This response

does not represent the views of any one individual partner, but rather the

experience of the project working across the private and public sector around

womens labour market participation.

2. Response

Q1: Do you support the general aims of the proposed Bill?

Women workers are overrepresented in the lowest paid in Scotland, and will

consequently be more likely to be beneficiaries of wage increases after the

introduction of a Living Wage. Close the Gap works to address womens unequal

pay across the labour market, and consequently, we support the general aims of

the proposed Bill as it will narrow the gap between men and womens pay.

Q3: What do you consider will be the advantages or disadvantages for employers

and employees if public sector performance clauses stipulate the payment of the

Living Wage?

If public sector performance clauses stipulate the payment of the Living Wage,

the advantages for both employers and employees are multitudinous. As has

been evidenced by both private sector and public sector organisations which


2/6


2

have already introduced the Living Wage, it effects a positive impact on workers

morale and motivation, and also lowers turnover and absence, reducing the costs

associated with recruitment, retention and absenteeism.

A Greater London Authority-commissioned independent study of the business

benefits of implementing a Living Wage policy in London found that more than 80

per cent of employers believe that the Living Wage had enhanced the quality of

the work of their staff, while absenteeism had fallen by approximately 25 per cent.

Two thirds of employers reported a significant impact on recruitment and

retention within their organisation. 70 per cent of employers felt that the Living

Wage had increased consumer awareness of their organisations commitment to

be an ethical employer. The research also found that 75 per cent of employees

reported increases in work quality as a result of receiving the Living Wage.

Furthermore, 50 per cent of employees felt that the Living Wage had made them

more willing to implement changes in their working practices; enabled them torequire fewer concessions to effect change; and made them more likely to adopt

changes more quickly.1

Although introducing the Living Wage may slightly increase an employers wage

bill, paying higher wages reduces turnover and absenteeism costs because

employees feel more valued and are, therefore, more likely to stay with an

organisation. Some employers find that the savings entirely offset the increase in

wages.

For example, KPMG found that introducing the Living Wage, along with otherenhanced benefits such as holidays, sick pay and insurance has directly

contributed to the achievement of key goals in some areas of the business.

Turnover amongst cleaning staff has more than halved, morale amongst all

teams has been raised, and productivity has improved, as attitudes have been

more flexible and positive. KPMG also reviewed how it delivered services, and

found that it could pay the Living Wage without incurring an increase in costs.

This has specific relevance for women workers, who are concentrated in some of

the lowest paid occupations, such as cleaning. Women are also more likely to

work part-time than men, and most part-time work is in low-paid, low-status jobs,with high turnover rates. This gendered occupational segregation is a contributing

factor to the gender pay gap, and consequently, womens poverty, and also child

poverty.

Q4: Which public sector bodies should use contract performance clauses to

deliver the Living Wage?

1

GLA Economics (2009) An independent study of the business benefits of implementing a LivingWage policy in LondonLondon Economics


3/6


3

We are not aware of any reasons for excluding any public sector bodies from a

requirement to use contract performance clauses to deliver the Living Wage.

Any calls for the exclusion of a particular type or group of public bodies should

give rise to careful scrutiny of the equality impacts, including gender impacts, of

such an exclusion.

Q6: What information must be included in the Scottish Ministers report to the

Scottish Parliament?

We agree that any report to the Scottish Parliament must include, as a minimum,

information on:

The level of the Living Wage in Scotland, and the methodology for

determining this figure;

Low-pay mapping of Scotland (including type of industry; equalitygroups, including women; and work sectors i.e. private sector, occupational

sectors) and analysis;

Statistics showing the progress on payment of the Living Wage and

analysis of progress made (in the public sector, private sector and third

sector);

Detail of any promotional activity undertaken to increase the number of

employers paying the Living Wage, and the outcomes of this work;

Detail of any other activity, as set out in the strategic plan, and whether

this were delivered on time and achieved its objectives; Detail of any compliance activity undertaken by employers whose

contractors and sub-contractors have not delivered against contract

performance clauses; and

Detail of forward planning for promotional activity, and other activity.

It is crucial that all relevant information and data included within the report be

gender-disaggregated to ensure that the impact on women is monitored and

analysed.

Q7: What is your assessment of the likely financial implications of the proposed

Bill to you or your organisation? What (if any) other signification financialimplications are likely to arise?

There will be no financial implications of the proposed Bill to our organisation. All

staff who work within the Close the Gap initiative are paid more than the Living

Wage.

Q8: Is the proposed Bill likely to have any substantial positive or negative

implications for equality? If it is likely to have a substantial negative implication,

how might this be minimised or avoided?


4/6


4

The Bill is likely to have substantial positive impact on gender inequality. Women

in Scotland are more likely to be in low-paid work than men. 22.6 per cent of

women, compared with 14.6 per cent of men earned less than 7.20 per hour in

2011.2

Womens employment in Scotland

Women working full-time currently earn 13.9 per cent less than men working full-

time while women working part-time earn 35.4 per cent less than men working

full-time.3Womens employment is concentrated in low-pay, low-status jobs such

as cleaning, catering, caring, clerical and retail work. Women are more likely to

have primary caring responsibilities, and due to a lack of quality, well-paid,

flexible work, are often forced into part-time work. Women comprise the vast

majority of part-time workers. In 2009 43 per cent of workers earning less than

7.00 per hour were in part-time jobs.4

Women comprise two-thirds of public sector workers, and consequently have

borne a disproportionate burden of public sector spending cuts, through job

losses, pay freezes, and a decrease in flexible working. There has been an

increase in the number of people underemployed (those working part-time when

they would prefer to work full-time) which has risen to 9.9 per cent of all Scottish

workers.5 As women are more likely to work part-time, this means that there will

be an increase in the number of people applying for part-time jobs, which in the

past have predominantly been done by women. Women working part-time time

now face competition from women and men who normally work full-time, for anincreasingly smaller number of jobs.

Arms length external organisations

An increasing number of womens jobs are now with arms length external

organisations (ALEOs). Most local authorities in Scotland have contracted out

some of their frontline services to ALEOs. These often operate to deliver services

in which female workers are concentrated, such as social care. The majority of

the 32 local authorities operate ALEOs, with around 130 major ALEOs in total.

Local authorities typically operate between one and four ALEOs, although threelocal authorities operate 14 or more.6 A Living Wage condition in public

2Scottish Parliament Local Government and Regeneration Committee (2012) Report on the Living

Wage in Scotland

3Office for National Statistics (2012) Annual Survey of Hours and Earnings

4The Poverty Alliance (2010) Low Pay in Scotland

5Office for National Statistics (2012) Underemployed Workers in the UK

6Close the Gap (2012) Invisible Women: Employment data collection in local government


5/6


5

procurement is likely to bring benefits to a significant number of female private

sector workers.

Pressure on household budgets

Pressures on womens incomes through job losses and pay freezes are coupledwith rising costs of living, which add to already straining family budgets. Childcare

costs in Scotland are amongst the highest in Britain. The average cost of after-

school childcare at 48.55 per week is higher than England and Wales. On

average, parents in Scotland can expect to spend 101.49 per week for 25 hours

of nursery care for a child under two years old. The same amount of nursery care

for a child aged two or over costs an average of 94.52 per week.7

Women experiencing in-work poverty often work in multiple low-paid jobs, with

little time to spend with their families, and frequently have to do without

fundamentals such as heating and healthy food.

Child poverty

Low pay is an important cause of womens poverty. From pregnancy onwards,

women face immediate financial penalties, thousands lose their jobs and many

more face discrimination and reduced opportunities in the workplace. Poverty

wages for women affect the whole family. Child poverty is inextricably linked to

the poverty of their mothers. Four out of ten children living in poverty are in

single mother households, and a further three out of ten children have a mother

on low or no income.

Around 25,000 children in Scotland are in severe poverty and in households

where at least one adult works.8 61 per cent of children in severe poverty live in a

lone parent household. There are 60,000 children in lone parent families, 22 per

cent of all children in lone parent families, were in severe poverty, compared with

5 per cent of children in couple households.

The impact of the Living Wage on women workers

Increasing the pay of Scotlands lowest paid workers will undoubtedly have animpact on women workers in Scotland. Research has shown that implementing

the Living Wage would increase the net income of a single parent with one child

by 5 per cent (the majority of whom are women), while a couple with one child

would see their income increase by 11 per cent.9

7Children in Scotland and The Daycare Trust (2012) The Scottish Childcare Lottery

8Save the Children (2011) Severe Child Poverty in Scotland

9Scottish Government (2010) Low pay and income inequality in Scotland


6/6


6

Where the Living Wage has been introduced in Scotland, it has tended to have

the most impact on women workers and part-time workers, the vast majority of

whom are women. For example, in Scottish Borders Council and East

Renfrewshire Council, 85 per cent and 76 per cent of beneficiaries respectively

were women. In the Scottish Government and associated agencies, 71 per centof beneficiaries were women.10

Increasing the pay of low-paid women workers would have a positive effect on

womens poverty, and child poverty. The impact will not only be felt on household

budgets, but also by local economies, because of womens marginal propensity

to consume. Money in womens pockets tends to be spent on food, clothing

children, and on goods and services for the family. This spending benefits local

businesses, thereby driving economic growth in local economies.

10

Scottish Parliament Local Government and Regeneration Committee (2012) Report on the LivingWage in Scotland

Documents

Close the Gap Consultation Response