Is the Minimum Wage everything we hoped it would be?

by Ray_North on October 28, 2014

imagesIn the last few months the Tories have been boasting about the Minimum Wage. Hmmm. They now see it is as something they are proud of; David Cameron even mentioned it at length in his leaders speech about howthey’ve increased it to £6.50 per hour, and how they intend to keep it, and even increase it.

Hmmm again. In fact I can feel my Tory suspicion antennae twitching.

You see, I’m instinctively wary of anything that the Tory’s brag about because invariably if they’re pleased with something, then sure as eggs are eggs, it will be something that perpetuates their particular economic and social agenda and isn’t great for the rest of us. I’m even more wary when the thing that they are boasting about is something that they once vehemently opposed – because this suggests that they have come to view the thing they opposed in a whole new light – which must cause us, on the left, to have a good long think about it as well.

Now,the Minimum Wage was introduced to combat low pay – and, quite bloody right I hear you say. It’s one of the things that Blair’s government can be proud of as it’s very difficult to argue with something that statutorily prevents an employer from paying someone a wage that they can’t possibly live on – which was often the case.

But, in the years since the minimum wage was introduced, the reality is that the gap between the lowest paid and the highest, or even the median earners has risen massively. We may have a minimum wage, but we also have a more unequal society than ever before. It speaks volumes that the rise of 19p per hour that the Tories introduced this autumn was the first above inflation rise for five years.

Even so, the minimum wage is paltry.

Those who are forced to live on it, that is, those who earn £6.50 per hour, earn, if they work a 40 hour week, £260 per week, that’s about £13,500 per year. Frankly, that’s appalling. It won’t even pay your rent – let alone give you a comfortable life.

Should we be proud of this?

Well, the Tories are.

In fact, I fear that many employers now use the minimum wage as an excuse for low wages – ‘it’s ok, I pay the minimum wage.’ Indeed, I fear, and I haven’t seen any research or analysis into this, so it remains a fear, that the minimum wage may actually give a statutory backing for low wages, and hence help perpetuate the low wage economy that we now have. Especially when the minimum wage has rarely increased higher than the rate of inflation and has never increased at the same rate as the highest wages.

Now, don’t get me wrong – I’m not advocating the scrapping of the minimum wage, far from it, but I do wonder if there are other things that could be put in place that would help address the problem of low wage.

Here’s a few ideas:

How about the return of Wages Councils – the Thatcher government abolished these back in the 80s partly because it deemed them to be corporatist and therefore didn’t accord with their world view, but also because it became difficult to implement, as the structure of the labour force changed, but, it may be about time that new modern wages councils were introduced again, perhaps for shop workers, or call centre workers or construction workers etc.

Similarly, I’d like to see a greater emphasis on the involvement of trade unions and collective bargaining – works councils are one way of evening out wages.

And, also, how about a maximum wage? I know, dangerously Marxist, all the bankers would go off to Frankfurt, yawn, yawn, yawn – but, if we expect one person to work for less than £70 per day, then, why would it be wrong to set some sort of maximum as well. Just a thought.

{ 1 comment… read it below or add one }

Billy Pointy-Head October 29, 2014 at 4:44 pm

The minimum wage is clearly a progressive idea but is also clearly set too low to be a living wage.

The organisation I work for was an early signatory to the London Living Wage and to the National Living Wage, both set at a higher level than the statutory minimum. We insist that any staff from our onsite managed service contractors (catering, cleaning etc.) are paid this additional sum. It’s good CSR and good business. We also try to ensure that a proportion of any risk/reward profit gained by a company providing these services is shared with the staff delivering the services at the front line.

The minimum wage needs to rise. Of course, business says that it can’t afford to do this, the usual arguments are trotted out about job losses, hampering entrepreneurial spirit etc. I think we can’t afford not to.

More important in my view is much closer scrutiny of the issue of zero hours contracts. We see jobless figures, cleverly manipulated of course, reducing month on month but so many of these consist of low pay/zero hours jobs. It’s one of the great evils of our time.

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