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Agenda Item No.

 

 

THE VALE OF GLAMORGAN COUNCIL

 

CABINET: 27TH JANUARY, 2014

 

REFERENCE FROM SCRUTINY COMMITTEE (CORPORATE RESOURCES): 10TH DECEMBER, 2013

 

 

690    THE LIVING WAGE (MD) –

 

The above matter had been the subject of a Request for Consideration submitted by Councillor R.J. Bertin who had requested a report to be submitted to the Scrutiny Committee for consideration regarding the implementation of the Living Wage and to support Unison’s campaign to get the Living Wage implemented and get the Authority committed to being a Living Wage employer.  The Living Wage he considered was a rate of pay per hour which was enough for workers and their families to be able to live free from poverty.  A copy of Councillor Bertin’s original Request for Consideration submission was set out in Appendix A to the report. 

 

The Scrutiny Committee considered a comprehensive report which had been prepared by the Head of Human Resources and set out the various implications for the Council if it chose to introduce the Living Wage.  He reminded the Scrutiny Committee that the Living Wage (LW) was entirely voluntary and in Wales to date there were 16 employers currently accredited with the Living Wage Foundation including, one local authority (Caerphilly).  There were also two other known Councils within Wales who were paying staff currently in accordance with the LW but had not committed to the wider and ongoing requirements as set out in the Living Wage Foundation.  The Head of Human Resources went on also to refer to the requirements for accreditation to be an official LW employer and separately he made reference to the objectives of the LW and particularly in relation to address low pay and in-work poverty.  The benefits of the introduction of the LW had been cited by the Citizens UK document “Living Wage: A Guide for Employers†which were also set out in paragraph 12 of the report.  These benefits were based on a survey of the beliefs and perceptions of those accredited LW employers.  In referring to these benefits the Head of Human Resources indicated that they were clear positive benefits for businesses and particularly relevant at present where public sector employers were searching for additional engagement and capacity from a workforce that was diminishing in numbers.  He also alluded to employee motivation and the relationship of pay.  He also referred to the example the Council would set for taking the lead to other local employers and indeed across Wales if they chose to adopt the LW.  Separately he alluded to the guidance note from the Local Government Association dated November 2013 which set out future concerns about recruitment and retention rates at the lower grade levels which had been identified.  He referred specifically to two points which were contained in the guidance note which related to the increasing number of flexible lower skilled jobs within the UK economy and also in regard to a cautionary note which warned against complacency given “the fact that the austerity programme would continue to hit Council budgets long after the rest of the economy had recoveredâ€.  His attention then turned to the concerns in regard to the implications of introducing the LW and, whilst acknowledging the positive benefits of introducing such, there were a number of fundamental concerns that remained.  These related to the affordability of such an initiative in the current economic climate, concerns about the true impact the LW would have on in-work poverty and concerns about the immediate and ongoing impact on the Council’s existing pay structure following Job Evaluation and the associated vulnerability to new equal pay challenges.  The implications of such were set out in paragraphs 21 to 42 of the report. 

 

At this juncture the Head of Service then commented on the wider concerns in relation to the impact of the LW on low pay and drew Members’ attention to the doubt which remained about the timing of implementing the LW and the true impact it would have in reducing poverty.  Such concerns were set out in a number of research papers, some of which were included in the background papers to the report.  The main issues of concern raised in these research papers were set out in paragraph 45 of the report.  The Head of Human Resources also referred to the fact that the LW focused solely on the value of basic hourly pay rates and it did not take into account the other “non pay†benefits (generous sick pay schemes and high levels of employer pension contributions) which remained a significant element of local authorities’ terms and conditions.  He felt that the positive impact of these types of benefits in relation to reducing the effects of poverty clearly needed to be considered as part of the wider debate around the introduction of the LW. 

 

In summing up he felt that it was incumbent on the Committee to consider the appropriateness and timing of implementing the LW for the stated reasons set out in the report, in particular given the current budgetary pressures on councils.  In relation to the timing issue, he considered that the implementation of the LW may be considered more appropriate at a point where the Local Government financial settlement included the necessary funding for the full and ongoing consequences of implementing the LW. 

 

At this juncture the Chairman invited Mr. Rowan Hughes (Joint Trade Unions representative) to put forward the Unions’ position in regard to the adoption of the LW.

 

Mr. Hughes, in referring to the subject under debate, considered that it was a moral imperative to pay employees a fair wage for a fair day’s work.  He made reference to cross party political support for the adoption of the LW and referred to the fact that it was the Labour Party’s official policy and separately the Prime Minister had personally supported the initiative.

 

In responding to the report and to the specific points touched upon by the Head of Human Resources he confirmed that Caerphilly County Borough Council was a fully accredited employer with the Living Wage Foundation, Cardiff County Council was not officially credited but paid the LW via a supplement payment and he further indicated that Monmouthshire County Council was currently looking at the feasibility of implementing the initiative.  He contested the financial implications of introducing the LW and referred to the reported financial costs for Caerphilly to introduce it for part of the year and indeed indicated that a much bigger authority i.e. Glasgow had reportedly introduced it at a cost of £1.2m in the first year.  He acknowledged the benefits which were as set out in the report and he felt that the Council was in a position to take a strong lead setting an example for other local employers if a decision was taken to adopt the LW.  He accepted comments made and acknowledged these in regard to the affordability of introducing the LW in the current economic climate, particularly the fact that there had been a significant funding reduction to local governments across Wales, however he felt that it would be difficult for any organisation to ignore the fact that the initiative was the best way to tackle in-work poverty.  He also considered that the equal pay implications following from the potential introduction of the LW had been overstated in the report.  His attention then turned to the financial implications as detailed in the report and questioned the accuracy of these and enquired as to how the data had been captured.  He considered that the financial implications of introducing the LW for the Council would have a minimal impact on Council finances given that the LW was aimed at the lowest paid staff on the existing pay scales.  Any future national pay settlements would significantly reduce any costs and the assumptions made by the Head of Human Resources in regard to specific job types which he referred to in his comments to the Committee were misleading.  He also touched upon the existing gender pay gap which was a considerable issue for female staff in the Vale and it was particularly relevant given the efforts that the Council had made in the recent past. 

 

In summing up he reiterated his previous comments that a fair day’s pay for a fair day’s work should be the main consideration by the Committee.  He also made reference to funded sources that could be used to fund the implementation of the LW in the Council and alluded to historical budget which had been set aside but which had not been fully utilised given the restrictions placed on pay settlements in the public sector in recent past years by the Chancellor of the Exchequer.  He also referred to funding set aside in regard to job evaluation.  Overall he indicated that all salaries for staff in the Vale of Glamorgan had fallen behind given inflationary pressures over the past few years.

 

The Chairman at this point opened up questions to the Committee with general discussion centring around the following points:

 

·               The reliance on local government to consider the implementation of the LW without proper funding being in place to do so.  The Committee widely accepted the benefits of LW which was laudable, particularly given that it would address employees on the lowest salaries.

·               The fact that the adoption of the LW was not a statutory requirement whereas the minimum wage was.  Concerns in regard to the impact on the Council’s budget which was particularly relevant given the recent funding settlement from the Welsh Government.

·               The fact that the report outlining the Council’s budget proposals refer to the potential use of budgetary reserves to reduce the full impact of cuts and separate concerns about the use of reserves to pay salaries which was not sustainable.

·               That there was no guarantee that if adopted the cost associated with the LW would not increase in future years.

·               Concerns in regard to the recent “painful“ introduction of Job Evaluation in the Council and the risk to that scheme in the event that the LW was adopted.

·               There was a duty of the Committee to weigh up what was in the wider interests of the Council.

There were questions in regard to the motivational benefits from the adoption of the LW and, for some Members of the Committee, it was more of a morality issue. 

·               That the initial budget proposals under consideration in the agenda later in the report set out clear implications for the Council, particularly in relation to the potential for job losses and to adopt and pay the LW in the current economic climate would likely lead to further job losses.

·               If the UK Government and the Welsh Government supported the principle of adopting the LW then they should allocate appropriate funding to local government in future funding revenue support grant settlements.

·               There were more people in work receiving benefits than there were unemployed individuals. 

·               It was likely that many local authorities would resist paying the LW given the financial implications of introducing the same.

·               It would be more pragmatic if councils joined together to support a decent increase in the statutory minimum wage in the UK and campaign accordingly for the improvement of pay in regard to future minimum wage levels.

 

The Chairman then gave the Head of Human Resources, Mr. Hughes and Councillor Bertin an opportunity to sum up, with the Head of Human Resources indicated that in the event of the LW being adopted by the Council it would have to be paid on a consistent basis and if this was not done it would leave the Council vulnerable to legal challenges in regard to equal pay; Mr. Hughes reiterated his previous comments in that Caerphilly Council paid the LW by a supplement to avoid any challenges regarding equal pay and he also referred to a number of private sector companies who also paid the LW; Councillor Bertin referred to specific private sector employees who currently paid the LW and he felt that the Council should be leading the way with the adoption of the LW and was disappointed with the comments made and disputed the facts and figures contained in the report. 

 

The Chairman, in referring to the figures contained in the report, enquired of the Head of Financial Services as to what information had been taken into consideration when the information was prepared in the report.  The Head of Financial Services indicated that the figures had been based on an extract from the Council’s payroll data as of October 2013 and a line by line analysis of each job had been undertaken accounting for full time equivalent employees, basic rate overtime payments, casual workers’ payments, agency workers, etc.  However, he acknowledged that these were estimates based on best available information. 

 

Having regard to the above and related issues it was

 

RECOMMENDED – T H A T Cabinet be requested on behalf of the Council to seek a way of raising a campaign for the improvement of the Minimum Wage on a UK wide basis and lobby the UK / Welsh Governments to include in future Revenue Support Grant Settlements appropriate funding to ensure that the minimum wage could be adopted.

 

Reason for recommendation

 

To work towards the eradication of in-work poverty in Wales and the UK.â€

 

 

 

 

 

Attached as Appendix – Report to Scrutiny Committee (Corporate Resources): 10th December, 2013

 

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