A Scottish Minimum Wage
When Labour released their proposals for further devolution in March, they pitched it as giving the Scottish Parliament ‘Powers For A Purpose’. Rather than devolving power for the sake of devolving power, the argument went, Labour would look to give the Scottish Parliament the powers to pursue social change.
In practice, Labour’s proposals lacked the scope and ambition that many will seek from the next stage of the devolution settlement. Part of the problem was an unwillingness to separate Labour’s policy objectives from a discussion on devolved powers – leading to the ludicrous proposal that a Scottish Parliament should be able to increase tax for high earners but never decrease it, regardless of the wishes of the elected Government.
But ‘powers for a purpose’ is a fitting starting point. The great achievements of devolution so far have been the protection of public services from privatisation and the extension of universalism in education and health. With the limited scope of devolved powers as they stand, the Scottish Government has often felt like a gatekeeper against the worst excesses of UK Government policy. A new devolved settlement has the potential to change that.
Alex Salmond set out three tests as to whether the next settlement would be judged a success: economic powers to create prosperity and jobs; the power to tackle inequality; and giving Scotland a stronger voice on the international stage. Nicola Sturgeon has said that we should seek a settlement that will “allow us to create jobs, ensure proper fiscal accountability, protect our public services, deliver fair social security and tackle the inequality that scars our nation”.
One of the key powers that could deliver both on tackling inequality and in creating jobs would be the devolution of the National Minimum Wage.
A key part of the SNP’s proposals for independence was to guarantee that the minimum-wage would rise, at the very least, in line with inflation. The Scottish Government’s working group on welfare proposed a series of above inflation rises in order for the minimum-wage to reach the level of the Scottish Living Wage, currently paid to public sector workers in Scotland.
One of the key drivers of poverty in modern Scotland has been the failure of wages to rise in line with the cost of living. This is a phenomenon that stretches far further back than the financial crash of 2008, and one that we can’t expect to address itself naturally through the market. A universal Living Wage would end in-work poverty for full-time workers and begin to make a dent on levels of inequality over all.
Working poverty is not just a moral outrage – although it certainly is that – but destructive economic policy. There is overwhelming evidence that inequality on the scale currently experienced in Scotland is bad for overall economic growth. A worker on the minimum-wage has little spending power, little ability to save or to financially plan for the long-term, and may be one of many who are forced to turn to the vicious cycle of payday loans in order to pay their bills.
A National Living Wage would be a massive fiscal stimulus into every town centre and working-class community in Scotland. The two tests of creating prosperity and tackling inequality are inextricably linked together. A Scottish minimum-wage is one place to start.