Living Wage

Speech delivered on Thu 17th Sep 2009

I thank Frank McAveety for using his members' business debate for this important issue. As other members have done, I pay tribute to the work of the Scottish living wage campaign and the Poverty Alliance.

The living wage is an idea whose time has come. It is notorious that, while in recent times the number of people in employment has been at record levels-before the current recession, I hasten to say-and average incomes and wealth have been growing, there has been a huge and growing gap between the top and the bottom. A huge number of people bump along the bottom and are more prone to periodic unemployment, are dependent on an ever more complex benefit system and are existing, however it is defined, in a state of poverty. I agree with John Wilson's comment that poverty is about more than the financial aspect but, my goodness, the financial aspect is important.

A report published yesterday, I think, identified that the victims of the current financial crisis and recession are not the high-fliers whose greed and bonus culture contributed so much to the bubble bursting but the people who work in construction, manufacturing or support services. Broadly speaking, the lower down the line they are, the more likely they are to be affected by the adverse fallout of the recession and the financial problems. If ever there was a demonstration that the wage costs of the low paid did not drive the recession, the financial crisis was it.

There has been an emphasis in the public debate on doing away with the bonus culture-there has not been too much progress, but there has been a lot of debate about it-and there ought to be an equal debate about the implications at the other end of the scale of the low-wage culture, which has existed for far too long in our society.

In this morning's debate on Diageo, one thread that united all the strands was that large global companies have, and ought to have, responsibilities that go beyond consideration of the bottom line. In fairness to the better companies, many good companies recognise that that is the case. The point was made previously that good employers develop good employment practices. That obviously lifts living standards for many and, as Jackie Baillie said, it increases their productivity and reduces staff turnover and absenteeism. In short, a happier workforce is likely to be better for everybody. It is against that background that the campaign for a living wage-currently of £7 an hour-has resonance.

It is important to distinguish the living wage from the minimum wage. As has been said, the minimum wage is a legal minimum. It has been moderately successful in that context, although there are issues about how far it can be taken without having adverse effects, and the debate about that continues. The living wage is, in a sense, a voluntary arrangement-"voluntary but with compulsion with drivers" is probably the right way to put it. It has implications in the public sector, and a number of members have spoken about how it might pan out in the health service, in local councils and so on.

The leading efforts made by London and Glasgow have been important, but Glasgow is dealing with a fairly small number of workers. The big gains are there to be got in the private sector, because leading firms that pay a living wage would act as market leaders and set a benchmark that others would be encouraged and compelled to follow. All being well, that would start a virtuous circle. We must look in some detail at where the living wage would impact, although we know that its impact would work through in the hotel and restaurant trade, the retail and wholesale sectors, the construction industry to some extent and a number of other sectors. If we can get the whole thing going in the right direction, it should not put a cost on business but become something in which it is in their interest to invest.

Malcolm Chisholm mentioned Keynes in reference to redistribution and the good uses to which money can be put. In that context, it is also worth while to mention William Beveridge-incidentally, both Keynes and Beveridge were good Liberals-and the founding of the welfare state. The need to tackle poverty was seen not only as an equality issue but as one of basic liberty. People who do not have an income to sustain themselves and their families do not have liberty: they do not have the opportunity to take their fullest part in the society in which they live.

I turn to the economy and the ways in which it works. What do people on £2 million or £3 million spend their money on? I think that no one in the chamber can quite put themselves in that category. I know for certain that the question is quite different for those on £15,000 or £20,000 a year, or below.

The debate is an important one. There is a lot of mileage in it and a direction of travel needs to be taken forward. Many issues for both the public and private sector are involved. Implementing the living wage could have a significant and radical effect on the balance in our society and the way in which we work, including on the economics of the country. Implementation would achieve all of that, in addition to the obvious effect on the standard of living of many people in our society who are left behind by current trends. I have great pleasure in supporting the motion in Frank McAveety's name.

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Living Wage.