Low pay and decent work

In recent weeks there have been a number of helpful reports highlighting the economic and social impact of pay and conditions in Scotland.

Today, the University of West of Scotland-Oxfam Partnership has published its initial findings of a study into low paid work in Scotland; ‘What Makes for Decent Work’. This was based on a Scotland-wide consultation of more than 1500 people, using focus groups, individual interviews and participatory street stalls, as well as an opinion poll. UNISON Scotland helped with the focus groups and thanks to the members who participated.  The top ten priorities, from the focus groups, are: 

Overall, there was strong agreement amongst focus group participants that ‘basic needs’ involve a wage or salary that covers the basics in life, but is also sufficient to participate in society and to ‘save for a rainy day’. Interestingly, the latter factor is explicitly covered in the London Living Wage calculation, something we were discussing at a Living wage Commission round table in Scotland last week.

This project’s unique approach shows that people in Scotland prioritise factors that are not unreasonable and extravagant. They represent what many would see as quite limited expectations and should be common practice in twenty-first century Scotland. 

The Resolution Foundation adopted a more traditional economic analysis of the Scottish labour market in its presentation, ‘State of working Scotland: living standards, jobs and pay”.

This study found that though pay fell for Scottish workers, the size of the hit was significantly smaller for employees across most of the pay distribution than for the UK as a whole.  This better performance on pay post-crisis was partially due to a larger hit to employment. 

As a consequence they argue that if Scotland is to hold onto its new-found lead on pay over England and help incomes grow for families in the bottom half, regaining its tight labour market will be crucial. But on many counts, it appears that the Scottish jobs market still has a long way to go before being considered fully recovered.

Overall jobs growth in Scotland owes much to self-employment (although still well below UK average) and part-time work. Pay growth was not uniformly better in Scotland and as the chart below shows, many on the lower rungs of the earnings ladder did worse.

The new National ‘Living’ Wage will improve pay at the lower end of the pay scale in Scotland, although slightly less than in England. However, plans to raise the personal tax allowance to £12,500 by 2020 will do little for Scotland’s 500,000 lowest earners who are already outside the tax system and overall the tax change benefits higher earners. For those outside the tax system the introduction of Universal Credit is significant and could encourage low-hours working among some groups. Universal Credit cuts in 2020 will be a major hit on working families in Scotland.

Scottish households benefit from greater reliance on social renting and lower house prices, although the growing private rented to have an impact in the coming years. This means when interest rates finally increase, Scottish households are likely to be better placed to cope with the consequences.

Scotland also has a higher percentage of workers who are persistently stuck in low pay. We also have more polarised work, with a higher proportion of both working and workless households.

Another issue is precarious work. Figures released by the Office for National Statistics today, shows the number of workers who say they are on a zero-hours contract has increased by 104,000 to 801,000, 2.5% of the workforce. Scotland remains the lowest part of the UK for zero-hours working, with 59,000 or 2.2% of the workforce.

However, we should remember that these figures understate the level of precarious work because many workers on nominal hours contracts are not included in these figures. It also impacts on wages. Research published by the TUC shows that average weekly earnings for zero-hours workers are just £188, compared to £479 for permanent workers.

In summary, while in some respects Scotland is doing slightly better on pay than the rest of the UK – the challenges and priorities that face the low paid, in a period of declining real pay, remain the same.