ROCK-BOTTOM PAY FOR 5 MILLION WORKERS “CAN’T CARRY ON”, INSISTS ED MILIBAND
Labour leader Ed Miliband has outlined plans to increase the UK’s national minimum wage to a level closer to the country’s average income, if his party wins the election next year. Having over 5 million workers – including many recent graduates – earning rock-bottom salaries they can’t live on is a “terrible scandal” that must be tackled urgently, he said.
The proposals mark the first time Labour has suggested a long-term link between the minimum wage and median earnings – meaning the minimum wage would be a fixed percentage of the average salary of all UK workers. (Currently the figure is set in cash terms according to what the economy can afford year on year, with advice from the Low Pay Commission). Speaking on Radio 4’s Today, Miliband said:
“This gets at a terrible scandal in this country of 5 million in low-paid work unable to make ends meet. We have got to tackle it and I just don’t think we can carry on as we are. The minimum wage has done a good job in tackling the worst of exploitation but we have now got to tackle low pay.”
This year, thousands of graduates will find themselves working for low wages – whether they’re doing unpaid (or low paid) internships or stop-gap jobs (like cleaning, shop work and bar shifts, often on zero-hours contracts) while they hunt for better paid work. They will join the 5.2 million UK workers already earning less then the Living Wage (£8.80 in London, £7.45 outside the capital).
The trouble is, you can’t live on it. Earning just £6.31 an hour (if you’re 21 or over) means you can’t afford to pay your own rent (so you need housing benefit). Even with this extra support, there’s not much left over at the end of the month for other must-haves like transport – plus decent, nutritious food to keep you fit and healthy.
Miliband refused to put a figure on the new minimum wage, or at what proportion of average earnings the target would be set, saying this was for a discussion with industry. But the aim “was to raise it as a proportion of average earnings from where it is now.” A peek at the speech he will make later today reveals that he will also say:
“It is time to raise our sights again because Britain can do better than this. The next Labour government will restore the link between hard work and building a decent life for your family.
“A Labour government will establish a clear link between the level of the minimum wage and the scale of wages paid to other workers in our economy. We will say workers on the minimum wage must never be left behind because those who work hard to create our nation’s wealth should share in it.”
Miliband will make his proposal to write “a new chapter” in the battle against low pay at the launch of his party’s review of the minimum wage, undertaken by Alan Buckle, the former deputy chairman of KPMG International. Increasing the minimum wage in line with other workers’ salaries was and idea backed by Frances O’Grady, general secretary of the Trades Union Congress, who said today:
“The minimum wage grew from a union campaign to a landmark achievement of the last Labour government. Now after years of real wage cuts, we need to see far greater ambition to achieve fair pay.
“Unions have long argued that many employers can easily pay more than the legal minimum. This report sets out how government can act to help deliver higher wages in those sectors that can afford to. It’s also right that government uses the £138bn it spends in the private sector to boost take-up of the living wage.
“Alan Buckle’s report shows that fair pay goes hand in hand with running a successful economy. Labour should make this battle against low pay a top priority.”
But there were signs that employers would resist the move. Katja Hall, spokesperson for the Confederation of British Industry (CBI) – which represents the interests of the country’s businesses – warned that politicians should not interfere with the current system, where the Low Pay Commission advises on what businesses can afford to pay, without risking job losses:
“The national minimum wage has been a success in raising wages for the lowest paid because it’s been left to the Low Pay Commission, not politicians, to set the rate. A government proposed target would undermine the Commission’s independence.
“The simplicity of the national minimum wage is one of its strengths, but ultimately pay must reflect productivity. Every business should pay the national minimum wage, so we support better enforcement.
“The living wage takes no account of a businesses’ ability to pay, particularly smaller firms. That’s why it should remain voluntary, and reporting on it therefore isn’t appropriate.”
Graduate Fog is well aware of the problems faced by young people earning less than the living wage, who say that every month is a struggle and you feel trapped at the bottom of the salary ladder. Ed Miliband is right – it is a scandal that so many people are in this position in the UK today – one in three women in work is on low wages (and one in five men). And it makes no sense that higher-paid taxpayers are effectively subsidising employers by funding in-work benefits (like housing benefit) for those on low wages. This is a complicated problem and there are no easy answers – but it needs to be addressed urgently.
*SHOULD THE MINIMUM WAGE BE INCREASED?
Is the current minimum wage too low to live on? Do you support Ed Miliband’s idea to link the minimum wage to the median salary of other, better-paid workers? Or do you worry that it could mean fewer jobs will be available, if employers have to pay their staff more? Have your say below…