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Technical Note: Living Wage

Reduce the proportion of employees earning less than the Living Wage

DESCRIPTION:

To reduce the proportion of employees earning less than the Living Wage in Scotland.

SOURCE:

The data for this indicator is gathered through the Annual Survey of Hours and Earnings (ASHE). The survey, carried out by the Office for National Statistics (ONS) annually,  is based on a 1% sample of employee jobs taken from HM Revenue and Customs PAYE records.  Data on hours and earnings is gathered from employers and is treated confidentially. ASHE does not cover self-employed or employees not paid during the reference period.

ASHE is the most detailed and comprehensive source of earnings across the UK produced by the ONS

The latest ASHE publication can be found using the following link:

http://www.ons.gov.uk/ons/rel/ashe/annual-survey-of-hours-and-earnings/index.html

DEFINITIONS:

The Living Wage is an independently set hourly rate which is calculated according to the basic cost of living in the UK. The rate is normally set in the first week of November each year by the Living Wage Foundation and is calculated by the Centre for Research in Social Policy at Loughborough University.

To calculate the percentage of employees earning less than the Living Wage, the number of employees earning less than the Living Wage is divided by the total number of employees. The figure for 2016 below uses the Living Wage rate set in November 2015 of £8.25.

More on the Living Wage can be found using the following link:

http://www.livingwage.org.uk/what-living-wage

BASELINE AND PAST TRENDS:

The proportion of employees earning less than the Living Wage was 20.1% in 2016.

Year

Proportion

2014

19.3%

2015

19.6%

2016

20.1%

CRITERIA FOR RECENT CHANGE ARROW:

The evaluation is based on: any difference within +/- 1.5 percentage points of last year’s figure suggests that the position is more likely to be maintaining than showing any change. A decrease in the gap of 1.5 percentage points or more suggests that the position is improving; whereas an increase in the gap of 1.5 percentage points or more suggests the position is worsening.

For information on general methodological approach, please click here.

FUTURE ISSUES OR REVIEWS:

The Living Wage Foundation established a Commission to look into the future calculation of Living Wage rates, which issued their findings in September 2016. The report is available on the Living Wage Foundation’s website at:

http://www.livingwage.org.uk/calculation

ASSOCIATED TARGET:

The First Minister set a target for there to be 500 Scots-based Living Wage Accredited employers by the end of March 2016. This goal has been achieved (currently 624 Scots-based Living Wage Accredited employers as of October 2016). A new target of 1,000 Scots-based Living Wage Accredited employers by the end of Autumn 2017 has been set.