The Living Wage is a good idea – but we could, and should, do more

November 5, 2012 10:35 am

I’m on my way to Islington this morning to hear Ed Miliband return to a subject that is close to his heart – the Living Wage.

Two years ago I watched Miliband speak to volunteers in his campaign office about the Living Wage. Most of them were young, straight out of school and university. Many we’re facing minimum wage jobs, if they could get a job at all. For them, it was a message that hit home. Hard.

It was an issue that invigorated Ed’s leadership campaign, helping him to recruit volunteers and secure wavering voters. And it resonated – inside and outside the party – because it’s important, and appeals to people’s basic sense of fair play. If you work, you should be paid well enough to live without being dogged by poverty. It’s a hard message to argue against, and it places Miliband and Labour on the right side of history.

And yet, I still have a nagging feeling that it doesn’t go far enough. If we accept that the National Minimum Wage still leaves people living in abject poverty – and it does – then why are we willing to accept that as a legal wage floor? If the Living Wage is the level at which people can be reasonably expected to live and support themselves, why don’t we demand that the NMW is set at that level? To do otherwise is to tacitly accept that some will still be employed on poverty wages. I find that difficult to stomach.

The proponents of the Living Wage would argue that employers choosing to buy in to the Living Wage – either by conviction or co-ercion – is in itself a good thing. It opens up channels of communication between staff and employers that helps to improve relationships in the workplace in other intangible ways. They would also argue that it empowers working people to fight for a better deal. I agree – I wouldn’t be a trade unionist if I didn’t. Similarly they’d argue that “naming and shaming” employers who don’t pay the Living Wage might coerce them into paying the Living Wage. It’s possible, and in some cases it may work, but – call me old fashioned – I’d like to coerce employers out of paying poverty wages with legislation.

More cynical souls might suggest that the Living Wage is not enshrined in law because it would spook the business community, or could cost jobs. Those very same arguments were of course used against the minimum wage. Even more cynical types suggest that the Living Wage is newer and fresher than the Minimum Wage – and is politically distinct from the Blair era. I would hope that such petty politicking plays no part, when we are talking about the lives and paycheques of millions of people…

The problem is that as hard as I’ve tried, nothing has yet convinced me that Labour campaigning for a Living Wage is preferable to Labour committing to boosting the minimum wage. Every financial or fiscal argument in favour of the Living Wage is the same (but stronger) for a living minimum wage. As a growth multiplier, as a means to eliminate in work poverty and as a means of reducing child poverty – an across the board increase on the minimum wage would have a greater impact than a piecemeal Living Wage approach, however well co-ordinated.

Every council in the country – and every business – who are already paying the Living Wage should be applauded for what they’ve done. At a difficult financial time, they’ve taken a massive step. But now it’s time for every employer to be asked to do the same thing.

  • EmmaBurnell

    What we need to do is make the minimum wage converge with the cost of living. We do this not just by raising minimum wage rates, but also by implementing measures which reduce the significant costs in our lives, such as the too-high costs of housing and energy bills.

  • EmmaBurnell

    What we need to do is make the minimum wage converge with the cost of living. We do this not just by raising minimum wage rates, but also by implementing measures which reduce the significant costs in our lives, such as the too-high costs of housing and energy bills.

    • Bert Morgan

      Emma,
      Your avatar image suggests you may be a lot too young to remember a ‘prices and incomes policy’  that worked.
      What you propose in your comment is the same.
      Politics never progresses does it?

      Next, someone will suggest it is a waste of money for taxpayers to be subsidising private utilities just so they can continue paying shareholder bonuses, and will sugeest nationalisation as a solution!!!

      What’s new?

  • http://www.facebook.com/profile.php?id=100001116515833 Michael Carey

    I very much like the Living Wage and agree with this blog post one hundred percent. We need to think what we can do to account for unintended consequences, though.

    What would stop the capitalists from raising prices to safeguard their profit? Would it not be inflationary without significant intervention in companies’ decision-making?  And then how would we make sure that those without work, both those looking for work and those unable to, don’t fall even further behind?

  • http://www.facebook.com/people/Mark-Senior/526933811 Mark Senior

      The first step on the way to giving everyone a living wage is for the Labour Party and it’s MP’s to give their interns a wage of any sort .
      We currently have for example Brent Labour offering a part time internship at a wage of zero .

  • Amber_Star

    We need to be working towards parity of minimum & living wages across the EU. Otherwise, the lower wage economies suffer by 1. losing all their capable workers & 2. the remaining locals have less spending power so it’s a downward spiral.

    I think that countries having a difference between the minimum wage & living wage is not all bad. Paying minimum wage whilst a person is new e.g. for the 1st year with the rate going up in stages to the living wage over the next year or two might work quite well.

    It would give an employee something to look forward to & get them to believe in themselves; i.e. they deserve differentials, raises etc. as their value to the employer increases; & incremental raises from minimum to living are less likely to deter employers from taking on extra staff. It would incentivise employers to train staff & give them the opportunity to learn as many skills as possible so that they are ‘worth’ the extra.

    Okay, you’ll get crappy employers that would let people go after the first year & replace them with new probationery employees so they can keep paying the minimum wage but there’ll always be crappy employers whatever legislation you pass.

    • Jeremy_Preece

      Yes Amber_Star,
      The sting is in the tail – as in your last paragraph. And we really need to clamp down on the twylight zone companies that have a third-world work ethic!

  • Jeremy_Preece

    Ultimately I don’t think that in a society as rich as ours in the UK there is any reason for anyone to live in poverty. Still less do I think that it is right for anyone to be working hard and not have enough to pay the bills to just live.

    I remember my A level History (itself over 30 years ago), and learning about how the more philanthropic factory owners who paid their staff better, and provided better conditions, found that the staff became more productive and not less. Of course there were many (the bulk of the) factory owners who bulked at the idea, and would not follow that model on principal. Isn’t it amazing how history repeats itself!

    Therefore I am pleased to see that Ed M is speaking about living wage, and yes there is much in what Mark is saying about needing to pay people properly.

    There also needs to be something said about unemployment. It is a tragic waste of people’s lives to marginalised and stuck on the sidelines. Unemployed should be given help in finding work – not just be given “a damn good kicking”. But above all, before we help people back into work, we need to have real jobs available for them. At present it is like saying that if you are unemployed you should buy a lottery ticket. Then say that because one or tow people win every week it totally the fault of all of those who didn’t win for being personally inferior to the few that do win.
    That scenario – extreme as it is – follwos the same principal of passing of the buck for a lack of jobs away from the government and economic system, and instead just balme the unemployed them selves. If there are ten people gpoing after one job, the one person who get the job is very lucky. It is not possible that all ten could have had the one job!

    To me the unemployment issue is the one that needs much more coverage. And it maybe okay to use metophorical sticks to nudge people into work when there are jobs for them to go to, nbut not when there are no opportunites. f  

  • Carolekins

    Mark – you’re right, for purely political as well as ethical reasons.  With Boris Johnson having endorsed the living wage and No 10 doing the same, Labour will need to differentiate itself in some way: this would be a good way.

  • Monkey_Bach

    Eeek.

    I’ll never understand you humans.

    Out of one corner of your mouth you say that the minimum wage is too low for people to live on adequately and that people desperately need a living wage to raise them out of poverty and enable them to better support themselves less need for top-up benefits, while at the same time, out of the other side of your mouth, you say that is is perfectly acceptable to forcibly shoehorn any and every workless person into any kind of low-paid, temporary or part-time job no matter how unsuitable.

    So you humans quite rightly say that low wages and high rents are bad both for affected individuals (because they are forced to live pinched lives of great difficulty) and for the country generally (because inadequate wages necessitate increased welfare spending) unless the people under scrutiny are unemployed (in which case it doesn’t matter) and don’t intend to do anything about it anyway beyond trying to persuade amoral profit making entities (businesses and landlords) to pay more and charge less out of the simple goodness of their hearts.

    Like that’s going to happen!

    Surely the minimum wage should be a living wage?

    Otherwise what is the point?

    Eeek.

  • Quiet_Sceptic

    You don’t have to be cynical to believe that wage rates and hence production costs affect job creation / job losses. Just look around our former industrial cities, at all the industries which were once large employers in the UK, which still exist as large employers globally but have now moved abroad to low cost, low wage countries.

    Perhaps one of the few positives of having such a depleted manufacturing industry is that most people now work in the services sector or public sectors which are far less exposed to competition from low wage rate foreign labour.

  • robertcp

    I am not sure if I agree.  A legal Minimum Wage plus a voluntary living wage might be the best option.  Trade unions and government have an important role in making sure that as many people as possible get at least the Living Wage, but I am not convinced that it should be legally compulsory.  Minimum Wage jobs will still be useful for single and young people before they get something better.  An old American saying is that if you are on the minimum wage you need a new job.

    • Dave Postles

       ‘ An old American saying is that if you are on the minimum wage you need a new job.’
      Or, as Eddie Cochrane sang: ‘I’d like to help you, son, but you’re too young to vote’.

  • robertcp
  • http://twitter.com/AdamTyndall Adam Tyndall

    Mark, out of interest, do you think that a higher legislated minimum wage should remain a NATIONAL minimum wage? If so, how do you square that with the discrepancy between the Living Wage and the London Living Wage? Which one would you advocate as the legislated minimum wage? Or would you enshrine two rates in law?

  • markfergusonuk

    Good question. I’d suggest a higher NMW set at a level where all can live on it. Sure this would leave people better off in areas outside London and the SE, but that would stimulate the economy in those areas, which is essential for growth…

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