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…
‘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).’
In London, you cannot obtain Housing Benefits if you are renting from a private landlord (Buy to Let) via a lettings agency! They ask you to move out! And you cannot live on JSA! I have first-hand experience!
But wait, I am sure David and Gideon care! Remember the Maastricht treaty and the Social Chapter laying down EU policies on worker’s rights (including women) which conservatives opted out in 1996?
The EVIL EU! Yes, vote UKIP! That’s 21st Century Britain for you…you better not be unemployed or poor in this country. Or belong to the underclass.
The debate over the National Minimum Wage is, in my opinion, a smokescreen created by the major political parties to disguise the real issue of job security, wage negotiation and redundancy payment. Employers have lobbied politicians over the years to write legislation that makes it easier to hire and fire. Labour needs the support of employers and so has agreed with them to focus on NMW and avoid talking about ensuring the long-term economic security of workers, which would mean reversing the current employment legislation.
Whereas Blair encouraged people to have aspirations, Miliband is concentrating on the here-and-now, distancing himself from Blair’s policies which led to disenchantment.
Whilst this provides some excellent
An increase in minimum wage would result in higher unemployment and weaker global competitiveness of UK firms.
@ Jay
I hope one day you find yourself on National Minimum Wage in London, a graduate, debt-ridden which you cannot repay…
And find yourself homeless because a Buy-to-Let landlord has kicked you out of your shoddy bedsit (or studio flat as lettings agents say)…
I truly wish that on you…
Minimum wage is a safety net which provides employee’s with enough disposable income to live a reasonably comfortable lifestyle.
It puts food on the table, electric in the meter, pays the bills, and with enough careful budgeting. It can also pay towards running a vehicle.
People who say they cannot live on the minimum wage are just greedy, materialistic parasites who would rather claim off the tax payer than do a weeks hard graft.
No the minimum wage shouldn’t be increased, you want more money, then work extra hours, or get an evening job to top up you’re income.
If it’s good enough for the people of the US, then it’s good enough for the people of this country.
I’m also of the belief that the tax credits system should be abolished as it only acts as a barrier when it comes to earning.
Desmond.
@ Desmond
Have you tried to live on it in London? Have you any idea of the cost of transport in London? Rent, food etc.? I challenge you to.
When talking about wage levels, why does everyone forget that when all the work you’re likely to get hovers around minimum wage, hours matter far more than the wage in determining what is liveable.
As does whether you’re in London or not, how far north you are, if you’re renting a room with bills included (my only affordable option) or a flat.
That is, 35 hours @ £6.31/h is naturally more than a 20 hour contract @ £7 an hour. Although the latter will typically be topped up partially by Housing Benefit, whilst the 35 h/wk won’t – at least for a childless, under 35 year old living alone – though someone over 25 could get Working Tax Credit.
And what is meant by “liveable”? If it means renting a room with bills included in Birmingham (paying 40-50% of your income for the pleasure), buying a bus pass and going to the pub a bit, then full time minimum wage is “liveable” in Birmingham.
If it means renting a flat with bills and council tax on top (a very risky thing for someone under 35 with insecure work to do since Housing Benefit when you’re out of work is based on a room in a shared house) and/or running a car and having more than slow, pinpick savings (which would disappear on rent in a month or two between temp jobs), then no wage I’ve ever had would remotely be “liveable” (the most I’ve earned is £7.53 an hour full time, roughly the equivalent of £14.4k).
@Jay:
Remember that to have a mass consumer-based economy – as we have – you need a reasonable number of domestic consumers who can afford to buy what is being produced – not everything can be exported.
@Nicholas:
Is there no way of keeping it secret from the landlord that you’re on Housing Benefit, or does the council inform them?
My live-in landlords in Birmingham knew I was on HB between jobs, though mainly cos I didn’t have a contract til then so needed to ask them for one to show the council.
@Nicholas:
Or are you referring to tryong to find somewhere else to live whilst not working/working part time and dealing with all the “no DSS” signs (Spareroom is full of those too), rather than staying somewhere you were already living?
I get the impression in Brum at least – where of course the rental market is nowhere near as insane – than staying somewhere you’ve already been living after losing your job (especially as a lodger or in a houseshare with no letting agents involved) is a lot easier than trying to move into somewhere without a job.
Though even then, I’d have still risked eviction or rent arrears with access to credit or parental help, since the benefits system is so slow and everything gets suspended and messed up every time you start or end a temp job.
@Desmond:
“People who say they cannot live on the minimum wage are just greedy, materialistic parasites who would rather claim off the tax payer than do a weeks hard graft.”
Firstly, that money the “tax payer” thinks is his after he or she has earned it was conjured out of thin air by the state in the first place, and is merely a tool to allocate resources, not the be all and end all.
And minimum wage employers create things or provide services that the rest of us rely on, so should surely receive a reasonable minimum standard of living in return for devoting most of their waking hours to this work?
And secondly, this “greedy parasite” (greedier than a MP on expenses? Really) may be living in London, where a ROOM (let alone a flat with an electricity meter and council tax on top) can cost £450 (outer zones), £650 (Zone 2) or even £900 (one room I saw advertised on Fbk near Brick Lane) a month, and the tube to where their job could be over £200 a month.
Full time minimum wage for someone over 21 works out at about £890 every 4 weeks, a bit more if they’re over 25 and can get Working Tax Credit. £890- £450 rent – £200 on travel leaves £240, meaning 73% of their income has gone on a room (just a room, not a flat) and travelling to work. And if they lived in a flat, 90% or over 100% of their income would go on rent, bills and travelling to work.
That may be surviving (they can eat and have shelter), but I wouldn’t call such a low disposable income a living wage in terms of being a full part of the life of a rich country, especially if that person has to support a family (that are presumably squeezed into that one room with them).
@ Alex W
No, your landlord (or lettings agency) must be stated on your housing benefit application….and could not care less. Despite the landlord owning 17 bedsits in his house! I was homeless for 2 weeks. Yes, with my 2 degree certificates which I could wipe myself with.
I do hope Scotland part in September, there is no society left in England, no redistribution of income, the state has all but just gone, a very ugly place to live. Thatcher, made sure of that.
I would recommend any graduate to leave, too late for me, but others should have a better future than that…