Real living wage rapidly rising but work needed to boost Scottish economy, claims economist

Real living wage rates have seen a major uptick, however one economist believes major focus needs to be placed on boosting Scotland’s economy.

Rates accredited by the Living Wage Foundation have shown that almost 400,000 workers across the UK have benefited from increases in the voluntary real living wage.

Hourly rates are rising by £1 to £10.90 across the country – higher than the statutory £9.50 an hour for adults, and are paid by more than 11,000 employers accredited by the foundation.

While these numbers are generally announced in November, it was brought forward in recognition of the sharp increase in living costs over the past year, said the foundation.

Katherine Chapman, Living Wage Foundation director, said: “With living costs rising so rapidly, millions are facing an awful ‘heat or eat’ choice this winter – that’s why a real living wage is more vital than ever.

Alluding to the “incredibly difficult times” being faced by workers across the country, she said these rates aimed to provide workers and their families financial security.

“We know that the Living Wage is good for employers as well as workers, that’s why the real living wage must continue to be at the heart of solutions to tackle the cost of living crisis,” Ms Chapman said.

However, economist John McLaren has said a long-term plan needs focus in order to address the lower rates of economic growth in Scotland compared to the rest of the UK.

In a paper for Gordon Brown’s Our Scottish Future think tank, Mr McLaren said the Scottish Government’s recent plan for economic transformation was “ill focussed”.

He stated that since 2014, Scottish GDP growth per capita has been rising at half the rate of the UK as a whole.

The report notes that economic development spending is higher in Scotland than the UK average, but says this is not translating into higher productivity or growth.

It recommends increasing the budget of the Scottish National Investment Bank and focussing its remit.

Mr McLaren’s paper also says there should be a new Scottish “Treasury” department in order to improve the prioritisation of spending, introduce more growth incentives and to enforce better value for money.

He said: “The most important recommendation is to have a consistent and long-term approach to economic growth policy, as few of the recommendations here will make a difference quickly.

“Rather, they have the capacity to make an impact over time, as has been experienced in other countries who have taken a patient approach.

“The alternative approach, chopping and changing over time and with funds dispersed widely and intermittently, will inevitably lead to familiar failure experienced in the past.”