Starting this summer, many third sector organisations will have to pay the real Living Wage in order to receive public money for their work.
The Scottish Government have announced that, from 1 July, those applying for financial assistance from the public sector will need to pay their staff at least the real Living Wage and commit to Fair Work to be eligible for funding. The new requirements form part of the Scottish Government’s plan to build a fairer and more equal economy.
The real Living Wage is based on the cost of living which makes it different to the National Minimum Wage and the National Living Wage. The rate of pay from May 2023 is £10.90 per hour (outside London) and is applicable to all staff over the age of 18.
Fair Work is a framework which aims to encourage fulfilling work through the adoption of measures such as workforce development plans, employee engagement, flexible working, tackling the gender pay gap and creating inclusive workplaces.
The new rules will apply to organisations receiving grants from the Scottish Government, its enterprise agencies and other public bodies. The full detail of the new criteria, including any exemptions, has been published and can be read at this link. There are few exemptions, new criteria are unlikely to apply to emergency grants or to situations where an organisation is reliant on grant funding to survive.
Fair Work and the payment of the real Living Wage are already used as part of the Scottish Government’s process for purchasing and awarding contracts and so may already be familiar to some in the Third Sector.
Paying staff the real Living Wage is voluntary and organisations can choose to confirm their commitment to the wage by applying for accreditation from Living Wage Scotland. A Living Wage Action Group has been set up in the city aiming to make Aberdeen a Real Living Wage City At the moment there are only 23 accredited third sector organisations in Aberdeen City, which indicates there are significant issues to overcome for charitable and community organisations.
The Fair Work Convention have developed a framework and a vision that “By 2025, people in Scotland will have a world-leading working life where fair work drives success, wellbeing and prosperity for individuals, businesses, organisations and for society.” Their self-assessment tool is a good way to find out how well you are already doing.
We believe the Third Sector is already in a strong position when it comes to Fair Work and that employees, volunteers and supporters work hand-in-hand with their trustees and managers to make the lives of communities and people better every day. However, the economic landscape continues to be very unstable, and many third sector organisations are on flat funding agreements with little or no guarantee on income levels from year to year.
The real Living Wage increased by 10% this year. Will public sector grants increase by the same amount to allow the payment of increased wages? Time will tell, but it seems unlikely.
If you have questions about the new policy, or about the real Living Wage please contact our team of advisors who’ll be more than happy to help.
This article originally appeared in the May edition of ACVO News – read the magazine below and sign up to our mailing list to receive it free, direct to your inbox every month.