KEEPING costs down is crucial for any contractor but William Lithgow Transport still makes sure he pays the living wage. As the boss of a transport company and employer of more than 40 people, Lithgow has found that paying the living wage reduces staff turnover and the cost of hiring new employees.

The main work of the business is school contracts in South and East Ayrshire and South Lanarkshire and, because the contracts involve school pupils, full disclosure checks for all staff are required.

“If you have council contracts for picking up children then the staff all have to have full disclosure which takes a number of weeks and there are costs involved as well,” Lithgow said. “If I can hold on to staff then I don’t have to worry about that. There is always a certain turnover but it keeps it down and that is one reason I did it. I also believe in paying a living wage. The minimum wage just isn’t enough. I looked at what my margins were and decided I could afford to do it.”

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Lithgow was one of the first employers to become accredited as a Scottish Living Wage Employer, and has found no disadvantages to paying the living wage. “It gives my business stability,” he said.

As the company covers many rural areas, much of the work involves picking children up from parts of the school catchments that are accessible only by narrow country roads. The pupils are picked up in cars and minibuses which can cope better with the roads than large coaches.

Despite fuel costs, the business has done well enough for Lithgow to employ more staff in the past year.

“Making it work is all down to pricing,” he said. “If you don’t price properly then it is a struggle. I made that mistake when I started at first in 2000 but I soon got the hang of it.

“If you don’t, you will struggle in business. The good thing is that if you win a contract with the local authority it is for a number of years, so you do get security through that and there is a yearly cost of living increase as part of the contract, so that helps.”

As it is mainly school contracts that the company holds, one of the other reasons Lithgow pays the living wage is because of the length of the school holidays.

“Although I pay holiday pay, I can’t pay the whole three months the schools are off,” he said. “I pay six weeks a year which is more than required and I also pay slightly more than the living wage at £8.50. What tends to happen is that drivers save up their paid holiday leave for the summer holidays which are seven weeks so that more or less gives them a wage for the whole of the summer holidays and they don’t have such a big gap. I am very glad to be able to pay the living wage and do the right thing by my staff. The margins were enough at the time and still are, so it is a bit of profit- sharing in a way.

“I would say to any business owner that if they can afford to pay the living wage then they should. It is worthwhile and will keep staff longer and you won’t get the turnover that you would normally have and hopefully more loyal and content staff.”

Since it was launched in April 2014, more than 600 organisations in Scotland have signed up to the scheme to become accredited as official living wage employers, paying their workers at least £8.45 per hour.

Employers choose to pay the living wage on a voluntary basis, while the national minimum wage of £7.20 is statutory and enforced by HM Revenue and Customs (HMRC).