Living wage too costly?

Robert Kilgour
Robert Kilgour

PLANS to introduce a living wage for Fife Council employees have been questioned a property tycoon who believes the cost could be much greater than the £1.6m being set aside by the local authority.

Robert Kilgour, who is currently seeking planning permission to develop the former Station Hotel in Kirkcaldy to create a retirement flats complex, insists he supports the concept of the living wage.

But he is concerned about its introduction during the very difficult and changing economic climate we are in at the moment”.

Proposals to introduce the living wage have been included in the draft budget, with Council leader Alex Rowley insisting it is the right thing to do.

It will mean all Council employees will be paid a minimum of £7.45 per hour from April.

But Mr Kilgour said it was not just the cost of increasing low-paid employees’ wages, but the Council also needed to take into account the “differential costs”.

“If you have people earning £6.50 an hour and you increase their pay to £7.45 per hour to match the Living Wage, that’s fine,” he said.

Rising costs

“But what about the employees on £7.50 an hour, who previously earned £1 an hour more because their jobs carry greater responsibility?

‘‘Are they going to be happy earning just five pence more per hour?

‘‘They are going to want an increase too, which is going to push up the cost.

‘‘But if the Council says no, then it risks causing resentment and de-motivating their staff.”

Mr Kilgour – co-founder and director of Renaissance Care (Scotland) Ltd, which runs a number of care homes in the east and north of Scotland – also questioned the Council’s desire to see the living wage built into all public sector contracts.

“When the costs for a business increase, it has to look to make savings and put up the prices to its customers.

“Local authorities are the main customers of care homes.

‘‘If they want these businesses to increase the wages of their staff, their costs are going to increase and they will look at putting their prices up. Are the councils going to be prepared to pay an enhanced rate?”

Council pledge

All local authorities in Scotland have either introduced a living wage or, like Fife, have indicated their intention to do so. The Scottish Government is also committed to paying a living wage from April 2013.

The living wage will benefit Fife Council’s lowest paid workers – cleaners, home carers, catering assistants, drivers and clerical staff – who are currently paid as little as £6.36 an hour, just above the minimum wage of £6.19 an hour.

Announcing plans for its introduction, Cllr Rowley said: “A living wage can lift families out of poverty while reducing their reliance on public spending or private debt.

“Employers across the public and private sectors have found that, combined with a commitment to engage and develop their staff, it can make good business sense too.

“In addition, it can help local authorities meet their wider objectives by boosting local economies and supporting local communities.”