Businesses are crucial players in addressing Scotland's poverty problem

Businesses are being warned to stop being “poverty employers” and contribute to help eradicate poverty from Scottish society.

That is the hard hitting message highlighted by new research from the Poverty Alliance and the New Policy Institute which says that employers have a crucial role in creating a fairer more equitable Scotland.

The research sought to understand why employers engage in initiatives like the Living Wage. All the companies interviewed were accredited Living Wage employers, and were therefore already taking action that could be seen as addressing in-work poverty.

The study found that these employers clearly believed they have a role to play in tackling poverty. There were 390,000 children and adults in in-work poverty in Scotland over the three years to 2013/14. Of this 390,000, 170,000 (44%) were working-age employees, 9% of the total number of employees in Scotland over the period.

Companies said they pay the Living Wage neither for altruistic nor narrow ‘business’ reasons. Rather, they do so on the basis of a wider sense of where their own interests lie. These can include: reputation, with regard to customers, clients and employees; the importance of exercising leadership; and an acceptance that community well-being is part of company well-being.

A key challenge will be harnessing the enthusiasm of those companies that want to make a difference - Peter Kelly

It is by appealing to this ‘enlightened self-interest’ that government can encourage employers to play a bigger role in addressing poverty, the authors state.

Peter Kelly, director of the Poverty Alliance, said: “Business actions are central to creating a fairer Scotland. Companies not only have a role in addressing in-work poverty through initiatives like the Living Wage, but have a wider role.

“We have been working alongside companies of all shapes and sizes over the last two years as part of the Scottish Living Wage Accreditation Initiative. Whilst they may be a diverse group, we have been struck by the commitment that many have to having a wider impact.

“Companies we spoke to are not just concerned about the bottom line, they want to play a wider role where they can. If we are to create a fairer Scotland then a key challenge will be harnessing the enthusiasm of those companies that want to make a difference.”

Cabinet Secretary for Fair Work Cabinet Secretary Roseanna Cunningham added: “The Scottish Government recognises the need to ensure employees are paid fairly to avoid the prospect of in-work poverty. Over the last 18 months we have made real progress with Living Wage accreditations, and the Scottish Business Pledge and this week a Fair Work Framework for Scotland was launched.”