5. Will the Cabinet Secretary make a statement on the payment of the foundation living wage by local authorities in Wales? OAQ(5)0155(FLG)

Thank you for that question. Local authorities in Wales are taking a range of actions on lower pay. Some pay their employees the living wage, some are planning to introduce it, and others are moving closer to it by removing lower pay points.

Thank you, Cabinet Secretary. You’ll probably be aware that Cardiff University Business School recently carried out a survey of those employers across the UK who’ve chosen to become accredited living wage employers, i.e. paying the foundation living wage, which is of course £8.45—almost £1 more than the UK’s national minimal wage—and ensuring that the contractors that they use also pay the foundation living wage rates. The overwhelming majority of those surveyed identified that not only did the benefits far outweigh any costs, but less than one in five had needed to change contractors, as they too have been content to pay the foundation living wage.

Cabinet Secretary, given that local authorities are, in many areas of Wales, amongst the largest employers, will you join me in encouraging all councils in Wales to provide a lead within their local communities by not just paying the foundation living wage to directly employed staff, but to go the additional step and look to meet the accreditation standards by ensuring that their contractors pay it also?

Well, Llywydd, I thought that Dawn Bowden made a very important point at the start of that supplementary question, when she pointed out that for many organisations it makes good business sense to pay wages of this sort, which result in them being able to recruit and retain staff. At the Finance Committee this morning, we talked briefly about social care as an example of exactly that phenomenon. The turnover of staff in social care can be up to 30 per cent on an annual basis, and yet we know that where there are local authorities and care companies who pay their staff and organise them on terms and conditions that make it attractive for people to take up those jobs, to stay in those jobs, to benefit from the training that is then available, that is a more successful business model for those companies and for those authorities than trying to pay at the bottom of the pay scale, and then having to cope with all the other costs of recruitment, retraining and having to employ temporary staff to cover where gaps in workforce have emerged. So, I think she made the case for the payment of the foundation living wage in terms that local authorities and employers can understand, and I’m very keen, myself, to make that case with them whenever I have that opportunity.

Cabinet Secretary, can I add my support to this growing trend as well? I understand there are over 80 companies and organisations now throughout Wales who are paying the foundation living wage, including, Presiding Officer, the National Assembly and Cardiff council. I think the point you make there is exactly the right one. We do have a productivity crisis in this country, and a lot of it is caused by wages being simply too low. That part of the economy does need to innovate, and also, obviously, provide those employed in it with decent standards of living. So, I think the productivity and efficiency argument is very, very important, and we’ll see more and more practice of this from the 80 companies and those that will join them in the years ahead, I’m sure.

Well, I agree entirely with David Melding that low pay is the enemy of productivity, and we’ve seen that in the UK economy over the last seven years. When wages are held down, it becomes a perverse incentive for employers to keep people on where they could have taken other actions that would have led to greater productivity and, as a result, better wages for those people employed in them. I’m pleased to say, Llywydd, that as well as the National Assembly and Cardiff council, as the Member said, the Welsh Government is also accredited as a living wage employer with the Living Wage Foundation, and not only do we ensure that all directly employed staff, including apprentices, are paid the living wage, our agreement as a Government goes further than directly employed staff. In new Welsh Government contracts, we expect all contracted-out service providers to pay their on-site staff with the living wage, as well.