Scotland is forecast to have 400,000 low-paid workers in 2020, despite the UK Government’s introduction of the National Living Wage.
The Resolution Foundation estimates the number of Scots in poorly paid employment will fall from the current total of 470,000.
Conor D’Arcy, policy analyst at the Resolution Foundation, said “The National Living Wage is set to transform Scotland’s low-pay landscape. But it won’t eradicate the problem altogether – Scotland will still have 400,000 low-paid workers in 2020.”
The Government brought in the National Living Wage (NLW) from April 2016, with employers now required to pay all staff aged 25 and over a minimum of £7.20 an hour.
The think-tank expects this to rise to £7.50 an hour in April 2017 – with the new rate to be announced in Chancellor Philip Hammond’s Autumn Statement in November.
A 30p increase in the hourly rate could see workers receive an extra £600 a year, but the Resolution Foundation warned post-Brexit uncertainty makes it unlikely previous forecasts that pay will reach £9 an hour by 2020 will be met.
Mr D’Arcy said: “While there is much uncertainty over Scotland’s economic outlook, its highly likely that wage growth will be weaker than expected prior to the referendum. This means we’re unlikely to see a £9 minimum wage that (former chancellor) George Osborne talked about by 2020, though low-paid workers are still set for four years of big pay rises.”
He added: “As we approach the Autumn Statement we’ll soon learn what the NLW will be next year. An increase to around £7.50 will deliver a welcome annual pay rise of up to £600 for full-time staff. Though that’s less than the £800 raise previously forecast, it’s sensible that the size of the National Living Wage rise adjusts in line with wages of typical workers. This flexibility means that calls from some businesses to scale back the NLW even further are wide of the mark.
“Looking across the coming years, it’s clear that the National Living Wage is set to transform low pay across Britain. But ambitious policy announcements need equally ambitious implementation plans to make them a success.
“With over four million workers set to be earning the new legal minimum by 2020, ministers need to work closely with employers to ensure that they’re not just able to pay the legal minimum, but can offer staff a route out of low pay altogether.”
