The fact that we are even talking about the Living Wage is a sign of past failures.
To mark Living Wage Week, Left Foot Forward has invited writers to contribute to a series on wages and the cost of living
The fact that we are even talking about the Living Wage is a sign of past failures
The news this week that nine in 10 big businesses in London aren’t paying all of their employees enough to live on should come as a major shock. The fact that few people will be surprised says much about the state of the supposed economic recovery. An economy that is failing to lift living standards for those at the bottom is one that can never be sustainable.
The fact that we even have to talk about a ‘living wage’ is a symptom of that failure. The post-war generation took it for granted that the ‘wage’ received in return for a day’s labour would be enough to live on – indeed it was expected to support a dependent spouse and children.
One wage was supposed to be – and most often was – enough to support a whole family. The idea that anyone could be paid less than what they needed to pay the rent and put food on the table would have been completely alien to anyone working in the 1960s and 1970s. Strong trade unions ensured that prosperity was more evenly shared than it is today.
No one, however, is suggesting that all we need to do is wind the clock back and all will be well – too much has changed in the last 30 years. We need new tools to achieve just outcomes, to make sure that no one is left behind, and that work is adequately rewarded.
The Living Wage is one such tool: independent analysis that calculates the minimum someone needs to live on; a set of standards to hold companies to account; and behind it a campaigning organisation that cajoles, harries and harasses the miscreants.
Citizens UK deserves huge amounts of credit for setting up the Living Wage Foundation and for making the payment of poverty wages a political issue. From small beginnings in the East End of London the Foundation has become a major force with more than 1,000 employers now signed up to pay their staff a living wage.
But we need to go much further.
Across the UK more than 5 million people are paid less than the living wage of £7.85 an hour (£9.15 in London). Nearly half a million of them work in the public sector. That’s five million lives that are being blighted by corporate greed and government apathy.
The national minimum wage has the potential to make a big difference to those five million people. But successive governments have presided over a system that sets the rate far too low. £6.50 an hour falls a long way short of providing enough to make ends meet. And if you’re under 18 years old you could be legally getting paid as little as £3.79 an hour – less than half of the living wage level.
It would help to put more money into local economies – Joe’s corner café would be helped to pay the living wage when the street sweepers outside can afford to pop in for a cup of tea, and when the homecare workers (now mostly not even paid the legal minimum wage, with their travelling time between appointments not included in their hours) can gather for a slice of cake after a hardworking day.
Those small business would also be put into a better position to pay the living wage were the playing field with big business and multinationals to be levelled. If big business was made to pay fair taxes, was made to treat staff fairly – not just with a living wage but also by banning zero-hours contracts – and was made to pay its small suppliers fairly and on time, then smaller firms and cooperatives would have a better chance to compete and prosper.
The living wage is an idea whose time has come. That’s why the Green Party wants to back up moral outrage with legal muscle. Under our plans every worker aged 16 and above would be entitled to the full minimum wage. We’d raise the minimum wage so that it matches living wage levels and increase it every year. By 2020 no one would earn less than £10 an hour.
Making the Living Wage a mandatory requirement for all employers would begin to make our economy work for the low paid. That’s what I’ll be pushing for this Living Wage Week.
Natalie Bennett is the leader of the Green Party. Follow her on Twitter
29 Responses to “Moral outrage about the Living Wage isn’t enough: it must be backed by legal muscle”
David Stringer
I think the intent is that successive governments have been passive in letting corporations introduce zero hours contracts and believed corporate propaganda about how reducing workers’ rights are good for profitability, and therefore the entire economy (TTIP being the next, most blatant version of this). Obviously, greed and stupidity are equally valid explanations for their actions.
Peter Martin
Government regulation doesn’t create any extra demand or spending power in the economy. That’s not to say that government should not regulate against unscrupulous employers but, as the experience of the EZ shows, social laws alone aren’t going to fix the problem of low demand for labour which is the root cause of low levels of pay and high levels of underemployment and unemployment.
When demand for labour was strong, there was no such thing as a zero hour contract. Not because it was illegal. In fact, no-one had never heard of the term until relatively recently, but because employers had to treat their workforce fairly. Otherwise, they’d leave and find work elsewhere and certainly the unions would have had enough muscle would sort them out! That was the situation prior to the 80’s. Thatcherite neoliberalism changed all that. Its known as austerity economics now. That’s the main problem.
blarg1987
Which raises a new question, how would you cover this cost?
Do not get me wrong I believe we should get people out of tax who are on the minimum wage, but be curious how would you fund it or what service provisions would you cut to cover the cost?
David Stringer
Higher minimum wage regulation forces money out of the hands of executives, into the hands of the lower-paid, then that moves it around local economies.
I agree that it’s not enough by itself though, I think the state should do much more in training people up, as well as ambitious building programmes where appropriate.
Peter Martin
It’s true that transferring money from the wealthy to the less wealthy certainly means that it is more likely to be spent quickly rather than saved, or spent locally rather than on expensive imports etc.
I would agree even more that the key to getting the economy moving lies in spending on infrastructure. The costings for this kind of spending are largely superficial and based only on top line figures. But, most spending by government very quickly comes back as taxes. All money spent on wages and salaries, for example, is subject to income tax and National insurance. So straightway some 30% or so comes straight back. Then there is a wage cost in the supplies of steel and concrete. That too generates more taxation revenue on the first spending.
Afterwards, money is spent and respent. Each time it attracts a whole range of taxes. VAT, CGT, Duty of fuel. etc etc. And yet more income tax and NI at each stage. The increased economic activity takes workers off the dole and saves on welfare payments.
When challenged about the deficit, this is how any self respecting Labour politician should be explaining how it “can be afforded”. Anything that is available for sale in the economy “can be afforded” in that sense. Whether it should be is another question. The only potential problem is the creation of inflation, which doesn’t look too likely right now, but when and if it does become a problem that would be the time to throttle back.