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Real Living Wage in Scottish Government Contracts

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In a bid to support Fair Work First practices, the Scottish Government has announced that all businesses bidding for its contracts will have to be an accredited Living Wage employer.

The policy is effective immediately and 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's National Living Wage, and helps create an inclusive and fair economy for all. The rates are announced annually by the Living Wage Foundation. As of today, the Real Living Wage is £9.50 an hour.

In a media release, Ivan McKee, Minister for Business, Trade, Tourism and Enterprise said: “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.”

He continued: “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 Fair Work practices to drive a greener, fairer and more sustainable economy.”

Richard Lochhead, Minister for Fair Work 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.”

Any organisation regardless of size, sector or location can sign up as a Living Wage employer. There has been a major increase in the number of accredited Living Wage employers over the last few years, raising from 14 in 2014 to around 2,300 on 2021. The Scottish Government will continue to encourage businesses to sign up to ensure more people see their pay uplifted so staff receive a fair day’s pay for their day’s work.

Individual public authorities will 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.

Read more on the Scottish Government website.

Supplier Development Programme

The public sector has a total spend of £12.6 billion every year to deliver public services or capital building projects that can provide vital work for businesses to grow across Scotland.

The full implications of this policy shift for Local Government tenders and SMEs are presently unclear. In the interim, it is likely that Contracting Authorities will continue to promote and encourage payment of real Living Wage and the benefits of Living Wage Employer Accreditation (which is part of Fair Work) in their contract opportunities. SDP offers free resources on Fair Work to SMEs logged into the website.

The Supplier Development Programme is here to support businesses to bid more successfully for contracts. By helping a business make the most of its credentials in responding to tenders through SDP's free tender training and events, which are open to Scottish SMEs, it will become “tender ready” for contract opportunities.

SDP has recently refreshed its core course materials and has developed some e-Learning modules. SDP has ensured that these training materials feature the implications and practical applications of Fair Work First practices, and that these are embedded throughout the full training programme.

The e-Learning modules are available to Scottish SMEs, third sector organisations and supported businesses. e-Learning allows suppliers to go through the training at their own pace.

Micro, small and medium sized businesses, third sector and supported businesses are encouraged to register free for upcoming tender training with the Supplier Development Programme to adequately prepare for changes related to public sector procurement in Scotland and beyond.

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