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Scotland: Council Sell-offs Hit Living Wage, Unions Maintain
The Herald - Scotland
Gerry Braiden

October 18, 2010
View the Original Article

Attempts to introduce a “living wage” for public-sector workers are being undermined by councils transferring work to private firms paying less, unions and politicians are warning.

With new Labour leader Ed Miliband pledging to pursue a living wage, which in Scotland amounts to around £7.50 an hour, union leaders north of the Border have been meeting ministers and opposition leaders to discuss the scheme.

Both the SNP and Labour in Scotland are understood to be championing the proposals, with the living wage expected to be a major election issue in the run-up to Holyrood 2011.

Scottish Labour’s Iain Gray has been vocal in recent weeks about progressing the Miliband agenda on wages.

But with the financial squeeze, the details of which will become clearer this week with Chancellor George Osborne’s spending announcement, town halls across Scotland are looking to outsource services to the private sector.

Some councils, like Edinburgh, are looking to put numerous services currently provided in-house out to tender, while in Glasgow, much discussion about bringing in private firms has been around waste disposal and roads work.

Unions claim many private-sector firms that are expected to be major players when it comes to bidding for public-sector work pay just the legal minimum and say the political will towards a living wage does not match up with the economic reality.

Business lobbyists have also questioned the affordability and practicality of the living wage for firms bidding for public and private-sector work.

Mike Kirby, chairman of Scotland’s largest public-sector union Unison, said claims by councils that they can only encourage rather than insist on a living wage because of EU competition law were a red herring, as procurement of services can take into account social factors.

He said: “The living wage is coming under pressure and the current climate will test the political commitment of those championing it. What is being done by those making noises about it to ensure it happens?

“They could insist upon stronger levels than mere encouragement

The GMB’s Martin Doran said: “Many firms who will be seeking work from Scottish councils do not pay the living wage, so we have a scenario where politicians are preaching one thing yet hiring firms paying the legal minimum.”

CBI Scotland’s assistant director David Lonsdale said: “At a time when firms continue to struggle, and with the cost of employing staff set to rise further next spring due to rises in employers’ NICs, the idea that private and public-sector employers can afford a significant jump in the pay bill to fund a living wage is frankly questionable.”

The living wage remains one of the lauded legacies of shamed former leader of Glasgow City Council Steven Purcell, who spearheaded a campaign for its introduction in the city and raised the pay of the few hundred council employees then earning less than £7 an hour.

It is in Glasgow, however, that unions claim the scheme is coming apart at the seams.

Cordia, an arms-length company set up by Mr Purcell to run everything from social care to catering, has failed several times to win business from the private sector because of its commitment to the living wage.

A Glasgow City Council spokesman said: “Glasgow’s Living Wage is a pioneering project, based on sound academic research, which aims to ensure that all Glaswegians in full-time employment are able to afford an acceptable standard of living. Although the council itself was the first organisation to commit to the scheme, at least 150 employers with a total of 50,000 staff have signed up so far.

“Like any other council, we procure some services externally – and we aim to work within the current legislative framework to encourage contractors to pay the Living Wage.”