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Minimum wage needs a boost

The level of benefits paid out to low-paid workers gives the lie to politicians' assertions that work pays.

Frances O' Grady's estimate that the Treasury would receive a £3.2 billion boost if low-paid workers received the living wage confirms the extent to which the state subsidises greedy employers.

The level of benefits paid out to low-paid workers gives the lie to politicians' assertions that work pays.

For too many workers having a job is no guarantee against lifelong poverty, as wages are inadequate to cope with the escalating cost of living.

This situation is exacerbated by the government's austerity policies, which hold down pay while doing nothing to counter inflation-busting increases for electricity, gas, water, food, rent and transport costs.

Widespread hardship is the reality that no amount of government propaganda proclaiming the end of recession can contradict.

Little credence can be given to ministerial assertions about the rate of unemployment decreasing when many of those deemed in work are on zero-hours contracts, dead-end "training" schemes and other imaginative vehicles to remove the jobless temporarily from the unemployed register.

There is a clear disconnect between the powerful and wealthy who barely noticed an economic crisis and the vast majority of working people who not only noticed it but felt its severity and still await a discernible improvement in their standard of living.

Ed Miliband pointed earlier this week to a "low pay emergency" in Britain, with over five million people - 20 per cent of all people in work - being paid less than the living wage.

He recognised that low wages are not only bad for working people but for the country as well, because jobs have to be subsidised by higher tax credits and in-work benefits.

However, there is an inconsistency between Miliband's recognition that the workers' share of the economy has to be increased and his backing for Ed Balls's position, shared with the Tories and Liberal Democrats, that the freeze on public-sector pay should be continued.

Pushing up hourly rates for workers at the very bottom while holding down the pay of those just above them is little more than redistribution of poverty.

Miliband's proposal that employers who sign up to pay the living wage to their workforce should benefit from a one-year tax rebate was treated by much of the media as though it was a maximalist demand, when in reality it was too timid.

The Labour leader suggested that the national minimum wage has lost 5 per cent of its value since David Cameron was given the keys to 10 Downing Street, but his response was restricted to promising to "strengthen" it.

In fact, this is not a problem created exclusively in the era of coalition government.

Warwick Business School professor Kim Hoque points out that the minimum wage has lost 10-12 per cent of its value since the financial crash of 2008.

He calculates that, if the minimum wage had kept pace since its introduction in 1999 with the annual increase in company directors' pay, it would now be about £19 an hour.

This confirms the growing gap between rich and poor in Britain, which will not be bridged by tinkering.

The minimum wage was a step forward for many exploited workers, but it now falls far short of its aim of producing wages on which people can live.

No-one should have to exist on less than a living wage, so the minimum wage should be set at that level.


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