Miliband and the minimum wage: extending the recovery to the low paid

Ensuring that the minimum wage begins to catch up with median earnings will mean the low paid enjoying some of the benefits of the economic recovery that the affluent are seeing.

Ensuring that the minimum wage begins to catch up with median earnings will mean the low paid seeing some of the benefits of the economic recovery that the affluent are enjoying

Ed Miliband will today announce that under a Labour government the minimum wage will rise faster than median earnings over the course of the next parliament. The announcement comes on the back of a recent pledge by chancellor George Osborne to increase the minimum wage to £7 by 2015/16.

And a rise is long overdue. Since peaking at 9.6 per cent above inflation in 2001, the value of the minimum wage has gradually fallen over recent years. Inflation levels surpassed the minimum wage percentage in 2008; the biggest difference between the two coming in 2011, when inflation percentages were almost 2 per cent above the minimum wage.

Min Wage

As well as failing to keep up with the cost of living, an analysis by the Resolution Foundation last year found that a worker on the minimum wage would need to work for 380 hours a week to match the annual salary of someone in the 99th percentile.

In other words, hard work has increasingly been going unrewarded.

George Osborne has already sought to encroach on traditional Labour territory by promising an inflation-busting rise to £7, but today Miliband will seek to take the incentive back by promising a mechanism which will guarantee that increases in the minimum wage at least catch up with the rate at which median wages increase.

Many on the left would undoubtedly prefer to see Miliband announce the introduction of a mandatory living wage (£7.65 nationwide and £8.80 in London), but there are fears that job losses would come as a result.

On the other hand, there we will no doubt see a degree of scaremongering from sections of the business community on the back of today’s announcement.

It’s worth remembering, however, that many of the same people and organisations vociferously opposed the introduction of the minimum wage – and in this case their doom-mongering about thousands of job losses looks rather silly today. Better wages for low paid workers is also not necessarily anti-business. Workers are consumers too, and if you pay your employees more they will tend to have more disposable income with which to visit the shops – therefore benefiting business. The key is striking the right balance.

What’s clear is how Britain’s army of low paid workers urgently need a leg up. Real wages have fallen by £1,600 a year since 2010, and tax and benefit changes mean that the average household will be £1,000 a year worse off by the General Election next year. The strong levels of employment, so often cited by the government as proof that their economic plan is working, mask a rise in self-employment and a jump in the number of people on insecure zero-hours contracts – around 1 million people – 4 per cent of the workforce – are now also on precarious zero-hour contracts.

But the coup de grace, if you want to call it that, is perhaps the fact that more working households were living in poverty in the UK last year than non-working ones – an indictment of any government that is serious about helping people to ‘get on’.

Ensuring that the minimum wage begins to catch up with median earnings will mean the low paid enjoying some of the benefits of the economic recovery that the affluent are seeing. Growth by itself is no longer enough, and in announcing an attractive policy that will increase the value of the minimum wage Miliband is asking (an seeking to answer) an important question: growth, yes, but growth for whom?

8 Responses to “Miliband and the minimum wage: extending the recovery to the low paid”

  1. treborc1

    So again the hard working comes out from a bloke who has not had anything to do other then politics and he’s only done that for five minutes.

    If your retired, sick, disabled, unemployed, or working for the public sector labour’s not the party, you may as well vote Tory..

    If your hard working Join the party if your not shove off. .

  2. Leon Wolfeson

    Ah, Tory propaganda. Right.

  3. Leon Wolfeson

    Weak. The living wage is an important step, and Australia shows you don’t get a jobpocalypse.

    Let’s also discuss the need to bring artifically limited benefits back in line with inflation, too. You know, the ones like JSA which have a very high spending multiple.

  4. colin morris

    i think its a winner em neednt give figures wait till nearer election as for employers they will moan as they did with its introduction claiming it would cost jobs it didnt then and it wont now it is only right and fitting that all should benefit a productive nation is a happy nation for all so yes ED MILLIBAND is on a winner and more importantly so are we the people

  5. Norfolk29

    Miliband should also announce that any company providing services for HMG will have to pay the Living Wage in the Region of the country in which the service is provided. Far too many of these big companies, KPMG, most of the Big banks, including Barclays and the like, pay minimum wage to a considerable proportion of their workforce and sub-contract out to zero hours contractors, the remainder.

    This is a disgrace and should be rectified by Local and National Government imposing rules on all contractors.

  6. sarntcrip

    LABOUR S CERTAINLY THE BEST OF A BAD BUNCHA TORY VOTE= GOODBYE NHS GOODBYE WELFARE HELLO PRE WAR PAYING TO SEE THE GP PRIVATISATION OF CHILD PROTECTION AND ECONOMIC RECOVERY FOR BILLIONAIRES AND FEW OTHERS ED HAS,APART FROM COMMITTING TO REPEALING THE BEDROOM TAX IS NOT PREPARED TO UNDO THE WRONGS DONE TO THE DISABLED AND LONG TERM SICK AS TARTED BY BLAIR’S MOB AND MADE WORSE BY THE RIGHTWING CALAMITY, SURVIVAL OF THE FITTEST COALITION

  7. Leon Wolfeson

    Yea, gotta include agency workers and sub-contractors they hire! Can’t leave those loopholes open ><

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