Setting standards for employment in Wales

March 13th 2017

Nisreen Mansour, Policy and Research Officer at the Bevan Foundation, sets out why the Welsh Government’s Code of Practice for Ethical Employment is a step in the right direction in the fight against low pay in Wales.

Last week, the Welsh Government published its Code of Practice for Ethical Employment. The 12 page document focusses on five employment issues, including the Living Wage, blacklisting and the use of zero-hour contracts. Public bodies, third sector organisations in receipt of public funds and – importantly – businesses involved in Welsh public sector supply chains are all expected to sign up to the code. It covers procurement, supplier selection, tendering, contract management and supplier management.

This is a big step for those of us who have been campaigning against low pay and greater adoption of the Living Wage. Not only does the code recommend  that  signatories consider paying all staff the voluntary Living Wage, it encourages them to raise this with suppliers  and consider becoming an accredited Living Wage employer.  Signatories are required to develop an action plan to show how they will implement the code, including timescales.

So why is this important? Adoption of the Living Wage in Wales has been far slower than we’d like. Only a handful of large employers in Wales have committed to paying it, predominantly in the public sector, and even fewer have gone down the accreditation route (meaning that their sub-contracted workforce is paid it as well). So while the Welsh NHS has made a Living Wage commitment to all directly employed staff, for example, this commitment is yet to be extended to the sub-contracted cleaning and catering staff.

This matters for two reasons. First, many of the jobs sub-contracted out by the public sector are in typically low-paid occupations and sectors, so this code should have a big impact here. Second, when public sector Living Wage commitments were not extended to sub-contracted workers, they’ve done nothing to narrow the median pay gap between the public and private sectors – something which this code should now begin to address.

And low pay is a problem in Wales. Around a quarter of jobs in Wales are paid below the Living Wage, according to the most recent estimate, and women, those in part-time work, private sector employees and those in certain occupations and industries like care work, hospitality, and leisure services are at much greater risk of being low paid (there’s more on this here). Encouraging employers to make a Living Wage commitment down through the supply chain should go some way to addressing this.

Recognition of paying the Living Wage in the tendering process also undoubtedly gives it much more value to employers. In our research on the Living Wage carried out last year, many employers were actually confused that no points were awarded for being a Living Wage employer.  Others, including several social care providers, said that they would pay it were it to help them secure public sector contracts. However, as it stood before this code was published, it made no difference if workers were paid a Living or a Minimum Wage.

We need to be much bolder about communicating the sort of employment we want to see in all parts of Wales’ economy, and we need government and other bodies to enable employers to meet this.  We called for greater recognition for Living Wage payment and accreditation last year, and  we’re delighted that Welsh Government has produced this code of practice. While I acknowledge that that terms like ‘should’ and ‘encourage’ do not actually mandate anyone to make changes to their pay structures or raise it with their supply chain , the code of practice is a welcome move by Welsh Government to use the levers at its disposal to tackle low pay.

Nisreen Mansour is the Bevan Foundation’s Policy and Research Officer. Our work on the Living Wage in Wales, the Cardiff Capital Region and Merthyr Tydfil was generously funded by Cardiff Business School, Chwarae Teg, Coalfields Regeneration Trust, Oxfam Cymru and Save the Children.

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