Political devolution and employment relations in Great Britain: the case of the Living Wage

• Author: David Nash,Edmund Heery,Deborah Hann
• Date: 01 September 2020
• Published date: 01 September 2020
• DOI: http://doi.org/10.1111/irj.12306

Political devolution and employment

relations in Great Britain: the case of the

Living Wage

Edmund Heery, Deborah Hann and David Nash

ABSTRACT

This article examines the role of the devolved governments of Scotland and Wales in

promoting the voluntary Living Wage. It shows that active promotion of the Living

Wage standard has emerged in both countries from a broader commitment to an eco-

nomic policy of ‘inclusive growth’. Employment law is not a devolved matter, and the

article identifies a broad range of economic incentives and soft forms of regulation

that have been used by the devolved governments to promote the Living Wage in

the absence of hard power to legislate. Non‐legislative forms of state intervention

are often regarded sceptically, but the article shows that the attempts of devolved gov-

ernments to spread the Living Wage have been impactful, particularly in Scotland.

1 INTRODUCTION

The creation of devolved national governments in Scotland and Wales is the most

substantial change in the internal structure of the British state of recent decades, es-

tablishing ‘a new constitutional settlement among the various parts of the United

Kingdom’(Bogdanor, 2019: 196). The effect of this change has been to generate var-

iation in public policy across the constituent nations of Great Britain, including var-

iation within the field of employment relations where the devolved governments of

Scotland and Wales have developed distinctive policies that differentiate them from

the UK government at Westminster. Thus, Bacon and Samuel (2017) have observed

that the devolved governments have evinced a strong commitment to social partner-

ship in the governance of public services, which contrasts sharply with the

union‐exclusionary stance adopted at UK level. Others have noted the retention of

statutory wage‐setting machinery in agriculture in Scotland and Wales when it has

been abolished in England and the readiness of devolved governments to adopt dis-

tinct and stronger versions of the Public Sector Equality Duty (Foster, 2015; Wil-

liams and Scott, 2016). Another area of policy where Scotland and Wales have

adopted distinctive positions is with regard to the Living Wage. The latter is a volun-

tary employment standard that has emerged from the community organising move-

ment and which is promoted by Citizens UK and its sister organisation the Living

Wage Foundation (Heery et al., 2017). The Scottish and Welsh governments have

❒Edmund Heery, Cardiff Business School, Cardiff University, Cardiff, UK, Deborah Hann, Cardiff

Business School, Cardiff University, Cardiff, UK and David Nash, Cardiff Business School, Cardiff

University, Cardiff, UK. Correspondence should be addressed to Professor Edmund Heery, Cardiff

Business School, Cardiff University, Cardiff, UK.

Email: heery@cardiff.ac.uk

Industrial Relations Journal 51:5, 391–409

ISSN 0019-8692

© 2020 The Authors. Industrial Relations Journal published by Brian Towers (BRITOW) and John Wiley & Sons Ltd

This is an open access article under the terms of the Creative Commons Attribution‐NonCommercial‐NoDerivs License,

which permits use and distribution in any medium, provided the original work is properly cited, the use is non‐commercial

and no modifications or adaptations are made.

not only adopted this standard and ensured that it is applied to their own employees

but also actively promoted the standard, encouraging other employers to pay the

Living Wage. In taking action of this kind, they contrast sharply with the UK gov-

ernment. Neither the adoption nor the promotion of the Living Wage is a policy of

the UK government, which has remained obdurate in the face of attempts by cam-

paigners to persuade it to commit to the standard.

In what follows, we first examine why the devolved governments of Scotland and

Wales have tried to promote the Living Wage. Part of the answer to this question lies

in political control: the Welsh Government is a Labour‐led coalition, and the Scottish

Government is formed by the Scottish National Party (SNP). Both governments are

broadly social democratic in their political philosophy, committed to pursuing redis-

tributive polices of which the Living Wage is an exemplar. In addition, however, both

governments are committed to an economic strategy founded on the concept of ‘in-

clusive growth’(Lupton et al., 2019), and it is this approach to economic development

that has underpinned their commitment to the Living Wage. It is new thinking in eco-

nomic policy that has provided a rationale for promoting the Living Wage standard.

Second, we consider how the governments of Scotland and Wales have tried to diffuse

the Living Wage. Under the reserved powers form of devolution, employment law is a

matter reserved to the UK Government, and the Scottish and Welsh governments

have no power to legislate for a Living Wage. In the absence of this capacity, de-

volved governments have relied upon soft regulation and a variety of economic and

reputational incentives to encourage employers to adopt the Living Wage. The pro-

motion of the latter exemplifies the reliance on relatively soft forms of intervention

that has come to characterise much state policymaking with regard to the labour mar-

ket (Deakin et al., 2012), and our purpose is to map the range of interventions of this

type used by devolved governments. Third and finally, we gauge the outcomes of these

policies by presenting original data on the numbers of employers adopting the Living

Wage and the number of workers benefiting in Scotland and Wales compared with

England. This comparison assumes two forms. On the one hand, we compare levels

of Living Wage adoption in public services in Scotland, Wales and England, as em-

ployers in these industries are most likely to be affected by government policy. On

the other hand, we examine how many workers are covered by and benefit from the

Living Wage standard across the economies of the three countries, including the sep-

arate regions of England whose economies are closer in scale to those of the devolved

nations. Earlier research on the impact of devolution on employment relations has

tended to focus on policy development, and our aim is to go further, establishing

whether distinctive policies in Scotland and Wales have generated significant labour

market outcomes.

The Living Wage itself comprises an hourly wage standard derived from re-

search into the expenditure needs of low‐wage families (Cominetti, 2019). Separate

rates are calculated on an annual basis for London and for the rest of the UK: in

mid‐2020, these rates were £10.75 and £9.30, respectively. If an employer adopts

the standard, then they must pay these rates to all direct employees and ensure that

they are also paid to the employees of contractors who work normally on the em-

ployer’s premises. The rates apply to all direct and indirect employees aged 18 and

over with the exception of apprentices. If an employer commits to the standard,

they can be accredited formally as a Living Wage Employer by the Living Wage

Foundation in return for an annual subscription. In Scotland and Wales, this task

of accrediting employers is performed by partner organisations: the Poverty

392 Edmund Heery, Deborah Hann and David Nash

© 2020 The Authors. Industrial Relations Journal published by Brian Towers (BRITOW) and John Wiley & Sons Ltd