Image caption The living wage is higher than the legal minimum wage

A new Scottish government report has concluded that increased productivity is likely to outweigh the cost of paying the living wage for many organisations.

The report looked at the benefits and concerns surrounding implementing the living wage of £7.85 per hour.

It found that the living wage can give employees higher standards of living, better health and improved morale.

Opponents of the living wage argue that it hits profits and competitiveness.

The report was published the day after First Minister Nicola Sturgeon urged businesses to commit to paying the living wage as part of the new Scottish Business Pledge.

Organisations can benefit from an enhanced reputation, the ability to recruit higher-calibre staff, a better working environment and greater staff engagement, the report claimed.

It was compiled using existing research on the impacts and practicalities of introducing the living wage and a series of in-depth interviews with Scottish living wage employers, Scottish government contractors and organisations representing key sectors and industries.

'Committed to fairness'

Roseanna Cunningham, Cabinet Secretary for Fair Work, Skills and Training, said: "This is a fascinating report which, on the whole, offers a very positive outlook on the benefits of paying the living wage.

"As well as the more obvious benefits to individuals receiving higher pay, I hope the findings on improved rates of absenteeism and better productivity help convince employers not already on board with the living wage that it could be a very positive step for their business."

Businessman Brendan Burns, who operates a forestry company and is a former UK policy chairman of the Federation of Small Businesses, told BBC Scotland on Tuesday that the Scottish government needed to address more than just the implementation of the living wage.

He said: "I pay more than the living wage, but that is not the point. To be able to pay the living wage, you have to get more efficiency into Scottish businesses.

"At this moment, that is what we don't have. Every businessman I meet will always say 'I would like to pay the living wage', but you can't pay out of a business if the profit isn't there. The profit is there when the business is more efficient."