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Protecting the low paid is key to the economic recovery

by David Scott, policy officer (Social Justice team). 

This column was first published in the Herald on 29 September 2021.

Your first job is a rite of passage. I remember mine – 15 or 16 years old, long hair tied back in a ponytail, serving customers in the café of a local department store.

The work was hardly backbreaking, but I remember feeling real pride when I got my first payslip. It was proof I finally had some financial independence. Money in the bank I could truly say I’d earned.

It would have been a tiny amount all in all. I was only working weekend shifts on the lowest band of the Minimum Wage. And as I got older and moved out, I definitely remember the purchasing power of my wages dropping. Costs went up but the money stayed the same, and so the wage slips felt less significant, less able to cover anything but the basics each month.

That picture will be familiar to many. At Citizens Advice Scotland we are constantly helping people in low paid work to keep their heads above water.

But we also help people with other serious employment issues, like illegal deductions from wages, false redundancies, and discrimination and harassment that far too many workers face. In the last year alone, employment advice was the third biggest need for the network - almost 175,000 pieces of advice in total.

Earlier this year, the Low Pay Commission - the body set up to advise the UK Government on setting the national minimum wage – opened its annual consultation on the state of the UK labour market, and we fed in many of our clients’ stories to help the Government understand the difficulties workers face every day.

There are some truly shocking cases in our response. We’ve seen staff sacked en masse and replaced with a new workforce when restrictions lifted. We’ve seen clients made redundant via text message, with no notice, process, or final pay. We’ve seen large chain employers refuse to furlough staff on the grounds that the National Insurance contributions would cost too much, leaving them with no income.

People have really suffered over the past year – and we know many more will have stayed quiet, thankful to have a job at all.

Problems with furlough were common. CAB clients reported having furlough payments deducted or paid inconsistently, with employers claiming more hours than they were paying out. One client was even told he had to “make up” his furlough pay, being expected to work 360 hours unpaid (!) to make back time “lost” to furlough. It’s a total abuse of the scheme, and it’s always the worker who loses out.

But beneath pandemic-specific issues were the standard employment rights breaches that have sadly become normal. Deductions from wages that take them below the legal minimum; clients whose employers refuse them statutory sick pay; even basic rights like receiving a payslip at the end of the month - time and again people are denied their most basic rights at work.

One case that sticks in my mind was a client who worked as a frontline courier during the pandemic. As his contract said he was self-employed, he had to pay hire fees for the company van he was required to use to do his job. But after an accident at work damaged the bumper of the van, the company attempted to charge him more than £1,000 for repairs (his local CAB eventually negotiated this down to £200). On top of that, he was left unable to work for six weeks, with no income or support from the courier company. These arrangements are growing more and more common, but they’d have been unthinkable even a decade ago.

With this in mind, it’s encouraging to see the UK Government again committing to improving the enforcement of workers’ rights with the creation of a single specialist enforcement body. But let’s also be clear: the Government has been dragging its feet on this. Plans for a single enforcement body were first announced in 2019 and we’ve seen little progress since then. People need their rights protected now.

There are two things the Government could do to help the lowest paid workers immediately.

First, the Government should provide additional funding to the HMRC’s existing compliance team, to encourage it to go after rogue employers who trample on workers’ rights. Our CAB advisers tell us that, despite the legal powers available to it, the compliance team carry out almost no proactive investigations at present. The Government should explore options to strengthen the HMRC’s hand until the new single enforcement body can be established.

Second, the Government should work to protect people’s incomes as we recover from the pandemic. The furlough scheme, which continues to be a lifeline for around 115,000 Scots, is set to end in September. Those people need the peace of mind that their incomes will be protected should they lose their jobs.

That also means that the Government must cancel the planned cut to Universal Credit next week.

Remember that UC is not only for the unemployed: over 180,000 people on UC in Scotland are in work. Cutting UC will harm their incomes and even risk pushing them off UC altogether, meaning their entitlement to other “passported” benefits like the Scottish Child Payment will also end. For some working families, that will mean an overnight income drop of £30 or £40 a week – a huge shock for anyone, never mind those on the lowest wages.

It feels like we’re finally coming out of the long last year. Shops and bars are reopening, and many of us are returning to work. But the last thing our economy needs is falling incomes and mass unemployment. For that recovery to stick, we must protect the lowest paid.