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Britain's low pay scandal

New report confirms that we are one of the most unequal societies in the developed world

Today’s annual low-pay report from auditing giant KPMG confirms that Britain is one of the most unequal societies in the developed world.

More than five million workers, 22 per cent of the employed labour force and growing, receive less than a living wage of £7.65 an hour (£8.80 in London) before tax and national insurance deductions.

Among other things, this exposes the total inadequacy of the current statutory minimum wage of £6.50 an hour, with its even more scandalous discrimination against young workers whose rates are even lower at £5.13 for 18-21 year olds, £3.79 for under 18s and a truly disgraceful £2.73 for first-year or under-18 apprentices.

Altogether, three quarters of young workers have to subsist on less than the living wage as calculated by Loughborough University and the Greater London Authority to meet the average family’s basic needs.

The KPMG report also reveals the extent to which low pay afflicts part-time workers, 43 per cent of whom receive less than the living wage and most of whom are women.


While the number of employers signing up to the living wage has more than doubled in the past year, according to the Living Wage Foundation, the arrangement is a voluntary one which benefits fewer than 2 per cent of low-paid employees.

Most big companies refuse to guarantee the living wage. Particularly notorious are those in the retail and restaurant trades, where the main capitalist monopolies pile up the profits for fat-cat directors and shareholders.

The KPMG report is even more stark when read alongside the same company’s annual survey of executive “remuneration.” This shows how the lead directors of the biggest 250 London Stock Exchange enterprises top up their basic salaries with bonuses and share options to carry off anywhere between £500,000 and £5 million a year each.

Meanwhile, taxpayers and the state subsidise poverty-pay employers by topping up low wages with state benefits

Britain’s whole “rags and riches” incomes scandal cries out for a bold response from the Labour Party which claims to represent the interests of working people and their families.


Pledges to reintroduce new top and bottom rates of income tax and equal-pay audits are utterly inadequate, while the party’s promise to raise the statutory minimum wage to £8 an hour by 2020 is a sick joke when it would reach that level anyway on the current Tory trajectory.

We need a much more progressive tax system on every front including incomes, property and wealth, capital gains and corporate profits. Companies dodging fair pay and taxation should be pursued and punished with the same vigour that is reserved for welfare claimants and illegal immigrants.

State subsidies to low-pay employers should end as the statutory minimum wage is transformed into a living one, with discrimination against part-time and young workers likewise abolished.

And as we pass the 125th anniversary of the first TUC resolution on equal pay for women, audits should be made compulsory across every sector of the economy.

In the meantime, relying on the Labour Party ensures nothing. Wherever possible, trade unions should begin an offensive to win and surpass a living wage across the private sector, while maximum solidarity is given to workers taking action to break the brutal pay freeze in the public sector.


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