Scottish independence: SNP considers inflation-based minimum wage but stops short of living wage

The current minimum wage stands at £6.31 an hour

The minimum wage in Scotland could rise in line with prices each year if the country votes for independence in September, the Scottish National Party has said.

The SNP pledged to set up a commission to consider a Scottish minimum wage which would rise "at least in line with inflation". It estimated that 150,000 people could be better off under the proposals.

The party said its research suggested that, if the inflation link had been introduced five years ago, the lowest-paid Scots would be up to £675 better off. The level minimum wage, currently £6.31 an hour, is recommended by the Low Pay Commission but has not kept pace with the cost of living since 2008.

Christina McKelvie, a SNP member of the Scottish Parliament, said: "We know one of the key drivers of poverty is earnings, which is why we would use the powers of independence to set a Scottish minimum wage guarantee. A minimum wage that rises - at the very least - in line with inflation.”

However, the SNP stopped short of backing proposals by an advisory group to the Scottish Government last month that it should seek to raise the legal minimum to equal the £7.65-an-hour “living wage”.

Iain Gray, Scottish Labour’s finance spokesman, accused the SNP of promising "jam tomorrow" and making “more vague promises.” He said the SNP should have supported a Labour amendment in the Scottish Parliament to make the £7.65-an-hour living wage part of all public sector contracts, which was defeated in March.

Business leaders expressed concern about the SNP's plan. The CBI said Scotland would need an expert body that could set rates above or below the rate of inflation like the Low Pay Commission.

“We believe that politically set minimum wages often fail to take into account the need to balance raising wages with avoiding higher unemployment caused by making creating jobs more expensive,” said a spokesman.

David Watt, director of the Institute of Directors in Scotland, said governments should not consider higher pay alone a solution to poverty and that a “fundamental review” of welfare and taxation was needed.

The Federation of Small Businesses in Scotland said: “We don’t unconditionally support inflationary increases. Other factors also need to be considered.”