Four ideas to solve the low pay crisis

An anonymous hotline to report employers for shady practices is just one way American activists are looking to tackle their own low pay crisis. Here are four ideas for solving our own.

Childcare vouchersj

Tuesday’s Guardian had an article about a proposal to set up an anonymous hotline for fast food workers in New York to report their employers for illegal and unfair practices, which is part of a planned campaign in the US to improve the conditions of low-paid workers.

The hotline comes on the back of lawsuits against McDonalds being taken out in three US states by several of its employees, who accuse the company of pushing their pay below the federal minimum wage of $7.25. The employees claim that McDonalds docks their wages to pay for uniforms, and does not pay them for all of the time they are at work.

The anonymous hotline to report employers for shady practices is just one way American activists are looking to tackle their own low pay crisis. Here are four ideas for solving our own:

1. Pay a Living Wage

Vince Cable recently raised the minimum wage by 3 per cent to £6.50 an hour in accordance with the recommendation of the Low Pay Commission. However this has been criticised as not high enough. Unison argue that the minimum wage should be raised to the level of the Living Wage, which is £8.80 in London and £7.65 in the rest of the country.

The right-wing press continually push the narrative of people on benefits being ‘scroungers’, but many of those who are on state benefits are in work, and have to rely on benefits because their earnings are simply to paltry to meet their living costs. Recent research by the National Housing Federation found that in England 310 working people every day are forced to turn to housing benefit to make ends meet.

2. Regulate zero hours contracts – ban exclusivity clauses

Zero hours contracts have been heavily criticised, and recent figures show that nearly 583,000 employees were forced to sign up to them last year. One of the main gripes with zero hours contracts is the exclusivity clause, which means that employees cannot work for another employer even if their main employer (who they have the zero hours contract with) is not giving them any work.

The Chartered Institute of Personnel and Development (CIPD) argues that exclusivity clauses in zero hours contracts should be banned, unless there is a legitimate business reason for using them. The CIPD also proposes that the government should give workers on zero hours contracts the right to request a minimum number of hours per week, once they have been working for an employer for a year.

3. Introduce rent controls

The exorbitant cost of housing is one of the main reasons those on low incomes are finding it difficult to make ends meet, and why many have to rely on housing benefit. One idea to help solve this problem which has been increasing in popularity is rent controls.

Systems of rent controls already operate in several European countries. The German system, mentioned in this piece by Labour MP David Lammy, is often cited as the most successful. Under this system, rents cannot be raised more than 20 per cent higher than similar properties in the area, renters have indefinite tenancies, and tenants only pay the whole of their rent if the property is in good condition, which gives landlords an incentive to maintain their properties.

The most common argument against rent controls is that they would provide a disincentive for new landlords to enter the housing market, thus causing a reduction in housing supply. However, as Lammy mentions in his article, this argument is undermined by the fact that most landlords do not build new properties, but instead buy existing ones.

Oxford academic Danny Dorling has also pointed out that if rent controls do lead to less buy-to-let landlords buying properties, this will have a positive effect, because the resulting drop in house prices will make it easier for ordinary buyers to get on to the housing ladder.

4. Control energy prices

After housing, energy prices are the next key factor in the cost of living crisis. Therefore capping energy prices, as proposed by Ed Miliband last year, is another measure which could ease the pressure on the living costs for low-paid workers.

It’s also a policy which is highly popular: a YouGov poll commissioned by Class (the Centre for Labour and Social Studies) in November last year found that 74 per cent believe the government should have the power to control gas and electricity prices.

The poll also found that a majority are in favour of going further than this, and re-nationalising the energy companies: 68 per cent said that they thought that the energy companies should be run in the public sector.

4 Responses to “Four ideas to solve the low pay crisis”

  1. JC

    So you want to increase the costs of employing people, reduce the amount of rental accommodation and make it almost impossible for people with no credit history to get an energy supply. How will that help?

  2. Helena Gardner

    CIPD’s ideas are utterly useless.

    Not wanting someone to work for a competitor lest they pass on information will be cited as “legitimate business reasons”, and letting people ask for minimum hours after a year. Well, the employer can always refuse, and a year tends to be quite a long time in many industries where zero hours contracts are heavily used e.g. hospitality.

    Exclusivity clauses should only be allowed if the employer pays a retainer that’s enough to live on.

  3. Peter Martin

    @David,

    You’ve omitted the biggest idea.

    Fundamentally the biggest problem for workers in the UK is that they don’t have the bargaining power they used to in the 60’s and 70’s.

    The younger generation may be unaware that the rate of unemployment in the 60’s was usually 2% or less. This was on the old scale before any of the changes in counting methods. On the new scale it would be closer to 1%. According to neoliberal economic theory the 60’s generation was impoverished due the war debts racked up by the previous generation!

    There was no call by the working classes in the 60’s for social legislation on such things as zero hour contracts, or the establishment of a living wage. There was no need for it. There were battles to fight on sexism and racism but that’s not quite the same. Then, workers could rely on the Unions to look after their interests, or if all else failed there was option of simply finding a better job.

    So you have to ask yourself if the laws of economics have fundamentally changed since then. If we could have less than 2% unemployment then, why should a target of 4% on the new scale be impossible now?

    http://petermartin2001.files.wordpress.com/2014/03/unemployment_1960-2010-585×3881.png?w=585

  4. Peter Martin

    @David,

    You’ve omitted the biggest idea.

    Fundamentally the biggest problem for workers in the UK is that they don’t have the bargaining power they used to in the 60’s and 70’s.

    The younger generation may be unaware that the rate of unemployment in the 60’s was usually 2% or less. This was on the old scale before any of the changes in counting methods. On the new scale it would be closer to 1%. According to neoliberal economic theory the 60’s generation was impoverished due the war debts racked up by the previous generation!

    There was no call by the working classes in the 60’s for social legislation on such things as zero hour contracts, or the establishment of a living wage. There was no need for it. There were battles to fight on sexism and racism but that’s not quite the same. Then, workers could rely on the Unions to look after their interests, or if all else failed there was option of simply finding a better job.

    So you have to ask yourself if the laws of economics have fundamentally changed since then. If we could have less than 2% unemployment then, why should a target of 4% on the new scale be impossible now?

Leave a Reply