Real Living Wage conditionality for winning public sector contracts
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Companies bidding to win Scottish Government contracts will have to pay the real Living Wage.
This will ensure public sector contracts tackle in work poverty and promote fair work practices across the public, private and third sector where there is a risk of low pay.
The real Living Wage has been consistently higher than the UK National Living Wage and helps create an inclusive and fair economy for all.
Business Minister Ivan McKee said: “We want to use every opportunity possible to promote fair work and ensure people are paid at least the real Living Wage. By using procurement powers to ensure bidders pay the real Living Wage, the Scottish Government is leading by example to help influence employment practices and embed fair work principles.
“We will continue to engage with relevant sectors to encourage others to adopt this change across the public, private and third sector. We are firmly focused on creating the right economic conditions and fair work practices to drive a greener, fairer and more sustainable economy.”
Fair Work Minister Richard Lochhead said: “As outlined in our Programme for Government, a range of measures are being taken forward to embed Fair Work First across the economy.
"The Scottish Government recognises pay as a clear way that an employer can demonstrate a commitment to their workforce, helping tackle in-work poverty alongside wider Fair Work First criteria.
“We will also introduce further changes to strengthen criteria for Scottish Government grants from next summer, subject to limits on devolved competence, as part of the Cooperation Agreement with the Scottish Green Party.
“The number of accredited living wage employers has increased from 14 in 2014 to just over 2,300 in 2021 and we would encourage more businesses to sign up to help ensure more people see their pay uplifted to at least the real Living Wage. We encourage organisations, regardless of size, sector or location, to adopt our progressive fair work approach which will help ensure all staff receive a fair day’s pay for the work they do.”
The Scottish public sector spends around £13 billion every year to deliver public services or capital building projects that can provide vital work for businesses across the country.
To be considered for most Scottish Government contracts in the future, companies must agree to pay at least the real Living Wage of £9.50 an hour, rates are announced annually by the Living Wage Foundation in early November.
The real Living Wage must be paid to workers on public contracts where it is a proportionate and relevant requirement and it does not discriminate amongst potential bidders.
Individual public authorities determine when it is appropriate to include fair work conditions in tenders, in tandem with other important sustainable outcomes like reaching net zero emissions and creating a positive impact on the local economy.