Ensuring a minimum wage of £8 an hour will mean the low paid seeing some of the benefits of the economic recovery.
Ensuring a minimum wage of £8 an hour will mean the low paid seeing some of the benefits of the economic recovery
Ed Miliband has announced that under a Labour government the minimum wage will rise to at least £8 an hour.
The plan will ensure that the lowest paid have about £60 extra in their pockets, ensuring that they are not left behind as the economy grows.
The minimum wage is set to rise by 19p in 10 days’ time to £6.50, but Miliband has promised to add £1.50 an hour to that.
The increase would be introduced in stages by the Low Pay Commission before October 2019.
This comes on the back of a pledge Miliband has already made which would ensure that if Labour wins power the minimum wage will increase in line with median earnings over the course of the next parliament.
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.
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 Miliband is seeking to take the incentive back by promising an increase to £8 an hour.
Meanwhile the CBI and other rich executives are already scaremongering on the back of Miliband’s announcement. But it’s worth remembering how many of the same people and organisations vociferously opposed the introduction of the minimum wage and all subsequent increases.
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 over £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.
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.
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