Foreword by the Cabinet Secretary for Finance
I am pleased to set out the Scottish Government's Public Sector Pay Policy for 2021-22. This maintains our distinctive Scottish approach to public sector pay and continues our focus on sustainability, reducing inequalities and promoting wellbeing. Our commitment to tackling poverty is again underlined by the specific measures set out to address low pay, recognising that the impacts of the COVID-19 pandemic have not been felt equally across society.
This pay policy balances the need to recognise the value of Scotland's public sector workforce, particularly in response to the pandemic, alongside the challenging outlook for public finances. Fair and progressive, the policy places specific emphasis on measures to tackle low pay and deliver on this Government's purpose and National Outcomes.
While there is still uncertainty around the 2021-22 financial settlement for Scotland as a result of the delayed UK Budget, I am clear that the pay freeze announced by the Chancellor at the UK Spending Review fundamentally misjudges the value of front line workers in battling this pandemic. It also fails to support our economic recovery.
I am therefore pleased to announce that, as well as continuing our commitment to the real Living Wage, newly increased to £9.50 per hour, the policy again guarantees a cash underpin of £750 for those earning £25,000 and below. This delivers a minimum pay increase of three per cent to the lowest earners and represents a significant step on our journey to pay restoration. The policy delivers an above-inflation headline pay increase of one per cent to all those earning between £25,000 and £80,000 and, to reduce the overall income gap, a capped increase of £800 for those earning above £80,000.
I wish to put on record again my gratitude to public sector workers in Scotland for their response to the pandemic and their approach to changes in the way work is delivered. My thinking on this journey has been invaluably informed by regular dialogue with trade unions, as the Government continues to support the development of a wellbeing economy. In this vein we will work with employers and trade unions to explore the opportunities that could be presented by a reduced working week as we adapt to new ways of working. And as a first step towards that, and in return for productivity improvements and wider changes to terms and conditions, this policy introduces the discretion for employers to work towards standardising to a 35 hour working week if and when it is practical to do so.
As we continue to respond to the pandemic and consider the need to reshape public services, this Government remains committed to building on our strong working relationship with trade unions and employers, re-affirming our wish to protect public sector jobs and front line services.
I am confident that working together we will rebuild our economy and deliver a better tomorrow for Scotland.
Kate Forbes MSP
Cabinet Secretary for Finance