TIME TO MAKE THE LIVING WAGE

THE NEW NATIONAL MINIMUM WAGE!

Low and stagnating pay is fast becoming a national crisis. In-work poverty has risen by 20% in the last decade and now stands at 6.1 million people living in low-income households. Average wages have fallen since 2008, and the number of low wage, low skill jobs is expected to grow

Instead of employment providing a route out of poverty, Britons are increasingly reliant on welfare to top up low wages, with the number of working families receiving tax credits rising 50% since 2003 to 3.3 million. Employment is being concentrated in low-paid work, resulting in 4.4m jobs paying less than £7 an hour; and only part-time hour’s jobs, largely in the retail sector, are keeping unemployment in check, with 1.4 million having to work part-time while seeking full-time work.

Largely because of ‘in-work’ poverty, child poverty is projected to rise from 2.6 million in 2009 to 3.1 million in 2015 and over the same period poverty among working-age adults without dependent children is projected to increase from 3.4 million to 4 million.

So Mr. Osborne and his ministers who claim that “poverty is about worklessness and welfare dependency”, should recognise that a couple of Independent reports have found that in fact “60% of children in low-income households have a working parent, the highest proportion in the history of statistics”.

As stated above, the rise in poverty rates is largely due to stagnating wages, minimum wage positions, part-time jobs, zero hour contracts, and now benefits cuts, which will result in lower incomes for some of the most vulnerable people in society.

So what would be the answer?

Well one part of a complex answer would be to pay a ‘Living wage’ as opposed to the ‘Minimum wage’.

What is the difference between a ‘Living wage’ and the ‘Minimum wage’?

Essentially, a Minimum wage is a set amount per hour that employers are required to pay employees within certain classes of employment (and those employees meet the qualifications put in place by the wage laws that apply in a given jurisdiction). By contrast, a Living wage is the amount that an employee must earn in order to enjoy a reasonable standard of living within a specified area or region.

One of the chief differences between a minimum wage and living wage is that the former is often fixed while the other is variable. For example, a national government may set the minimum wage that applies to all employees covered by the applicable wage laws, and employers in all parts of the nation must comply by paying qualified employees at least that minimum wage. With a living wage, the amount required to enjoy a decent standard of living may be higher in some areas, such as metropolitan areas, while a lower wage would allow that same level or standard of living in a different area like a rural location.

For example, the UK Living Wage for outside of London is currently £7.45 per hour (The figure is set annually by the Centre for Research in Social Policy at Loughborough University) whilst the London Living Wage is currently £8.55 per hour (The figure is set annually by the Greater London Authority and covers all Greater London Boroughs).

An independent study of the business benefits of implementing a Living Wage policy in London found that more than 80% of employers believe that the Living Wage had enhanced the quality of the work of their staff, while absenteeism had fallen by approximately 25%.

Two thirds of employers reported a significant impact on recruitment and retention within their organisation. 70% of employers felt that the Living Wage had increased consumer awareness of their organisation’s commitment to be an ethical employer. Following the adoption of the Living Wage the study found turnover of contractors fell from 4% to 1%.

Good for the Employee

The Living Wage affords people the opportunity to provide for themselves and their families.

75% of employees reported increases in work quality as a result of receiving the Living Wage.

50% of employees felt that the Living Wage had made them more willing to implement changes in their working practices; enabled them to require fewer concessions to effect change and made them more likely to adopt changes more quickly.

Good for Society

The Living Wage campaign was launched in 2001 by parents in East London, who were frustrated that working two minimum wage jobs left no time for family life.

The causes of poverty are complex and in order to improve lives there should be a package of solutions across policy areas. The Living Wage can be part of the solution. It’s estimated that over 45,000 families have been lifted out of working poverty as a direct result of the Living Wage being paid to them.

The Resolution Foundation think-tank has calculated that if all those currently on the minimum wage received the Living wage there would be a £2.2bn net saving to the public sector including higher income tax and national insurance receipts.

The independent think-tank, the Institute for Fiscal Studies, has calculated that for every pound spent paying the Living wage; the Treasury saves 50p through not needing to pay tax credits and benefits.

The ‘Living wage’ also has some high profile supporters. Ed Miliband – Leader of the Opposition said in 2013 ‘Paying more than the minimum wage is a really important idea’. He realises that if companies pay the Living wage the welfare bill can be cut and administration costs can be brought down as many instances of tax credit, housing benefit etc can be cut.

He has latterly committed Labour to give private sector businesses tax breaks if they commit to paying their workers the Living wage.

It’s a shame of course, he didn’t do more to get a ‘Living Wage’ implemented when he was in a high position in Government, but then his party only had 13 years! Probably too much to ask of an incredibly inefficient Government, under whom Employment Laws and real terms wages were eroded.

Another unlikely supporter is Boris Johnson – Mayor of London, who said recently ‘’Paying the London (Living) wage is not only morally right but makes good business sense.’’

The Resolution Foundation also looked at whether this makes sense for the public purse. They calculated that if the minimum wage was a genuine Living wage, the gross savings on the benefit bill and the extra tax revenue would add up to £3.6bn a year. Take off the higher public sector wage bill and you get a net saving of £2.2bn.

A compulsory Living wage could be combined with policies to reduce rent rises, like stabilising rent controls common on the continent. The Mayor of London should be shouting these ideas from the rooftops!

Why are we subsiding Corporations?

This idea that the Government should subsidise low paid workers, instead of companies paying them properly, is pure stupidity. Why would you make legal a ‘minimum wage’ that no-one can live on!

Why is it then that a policy of ‘pure stupidity’ is followed? There are two reasons – Corporate greed and Government Control?

The ‘Living Wage’ would be a long term investment for business but as with everything today, a short term fast buck for the CEO’s and shareholders of businesses, is considered far more important than addressing ‘in work’ poverty.

People in poverty are also easy to ‘manage’, being grateful for any scraps the Government and even their own employers throw them.

As a National Liberal, I’d like to ask you, regardless of whether you’re a National Liberal supporter or not, to write to the Prime Minister and call for a ‘Living Wage’ to be implemented BY LAW with immediate effect, to the following address: https://email.number10.gov.uk/

You can see it is not only fair it makes sense!

Glen Maney

A Member of the National Liberal Party