A National Living Wage would create jobs

November 4, 2013 1:45 pm

Raising the national minimum wage to the Living Wage would lead to more jobs being created in the UK economy, not less.

This is a view  which flies in the face of conventional wisdom.  Time after time journalists, politicians and commentators have proclaimed that, nice as it would be to raise the statutory minimum to the same level as the widely recognised Living Wage, it simply cannot be done. Too many jobs would be lost, they say. Poverty wages are the price we must pay for higher employment.

Unlike previous research, today’s Landman Economics Report looks at what would happen to the jobs market as a result of the stimulus to the economy from  raising the pay of millions of low paid workers to the Living Wage.  More people spending money in local shops and a reduction in the amount the government needs to spend on in-work benefits.  The report finds that, when you take this into account, shifting the NMW up to the Living Wage could create an extra 58,000 jobs.

The report’s author, Howard Reed is a former programme director at the IFS.  He concludes:

“it is unlikely that the extension of the Living Wage to all UK employees would result in any substantial aggregate employment losses. In fact, it is quite plausible that adopting the living wage on a statutory basis could actually increase overall employment in the UK.”

And to those who say that the Living Wage must remain a voluntary, moral marker, independent of the national minimum wage, I say now is the time to shift your position.  Local living Wage campaigns across the UK, including by my union UNISON, have been the foundation stone of the Living Wage movement.

We are only having this debate now because of all that hard work.

But we cannot escape facts.  During the period in which the Living Wage has come to prominence, the number of people earning poverty wages has gone through the roof, now standing at 4.8 million.  When 20% of the working population can’t make ends meet, we need a bigger solution which recognises the size of the problem.

UNISON members now look to a future Labour Government to step up to the mark.  The red-herring of unemployment is no longer available to those who oppose a National Living Wage.  Yesterday’s announcement of tax breaks for firms paying the Living Wage is a step in the right direction, but the eventual destination needs to be a Living Wage for all.

Britain’s millions of  low paid workers desperately need a pay rise and there is no doubt that this would be popular policy which could cut through the Westminster background noise.  60% of the general public support the change, with significant support even among Liberal Democrat and Conservative voters.

The popularity of this move will only grow further as a result of this new research .  People now know that this policy is not just the right thing to do, it is also the smart thing to do.  Let’s finally put an end to the absurdity of trying to build our economy on poverty wages.

Karen Jennings  is Assistant General Secretary for Bargaining, Negotiating and Equalities at UNISON. Their Living Wage Campaign Page can be found here

  • robertcp

    I have a bad feelings about articles like this. Labour should increase the Minimum Wage and promote the Living Wage, but doing it too quickly might cause problems. We should also remember that many people will be wary of Labour bankrupting the country, so a more cautious approach makes sense politically.

  • swatnan

    Reminds of St Augustines quote: ‘God make me good, but not just yet.’
    Change shouldn’t be a matter of decades, but a matter of years. If you legislate, and have good and right on your side, then the people will change, and they’ll thank you for it after. That was the trouble with the Blair Govt, it lacked vision, and purpose, 10 out of the 13 years in power. Do it now.

Latest

  • News Labour lose control of county council after resignation

    Labour lose control of county council after resignation

    Labour appear to have lost control of Nottinghamshire County Council following the resignation of a councillor from the Party. Cllr Ian Campbell last night confirmed on Twitter that he was resigning the party whip, but would continue as an independent. The resignation leaves Labour with 33 seats on the 67-seat council, just shy of an overall majority. It is not yet clear why Campbell has decided to resign – although last week he did announce that he was opposed to the […]

    Read more →
  • Comment The reality behind IDS’s unemployment figures

    The reality behind IDS’s unemployment figures

    Figures released earlier this month by the Office for National Statistics show the number of people unemployed falling by 132,000 to 2.08 million in the three months to the end of June.  At 6.4% this is the lowest since late 2008 and down from 6.5% in May. These figures had the Work and Pensions Secretary, Iain Duncan Smith, rushing into TV studios to claim that the Tories’ long-term economic plan was ‘working’ as people were no longer trapped in unemployment […]

    Read more →
  • Comment Scotland How could Labour tackle inequality in an independent Scotland?

    How could Labour tackle inequality in an independent Scotland?

    Labour has worked to reject a central claim of the pro-independence campaign, that an independent Scotland would be a fairer and more equal country. Scottish Labour leader Johann Lamont has insisted that Alex Salmond doesn’t care enough about social justice to reduce inequality, and Gordon Brown has predicted that SNP policy to lower corporation tax will start a race to the bottom on wages. Despite growing support for independence in working class communities, Labour’s argument seems to resonate. Writing for […]

    Read more →
  • Comment Labour shouldn’t increase National Insurance contributions to fund the NHS

    Labour shouldn’t increase National Insurance contributions to fund the NHS

    What’s safer, more appealing and more likely to guarantee electoral victory than the clinical and antiseptic interpretation of a ComRes survey? Expensive American politicos-for-hire might have a claim to the title. Still, the news that 49% of people would pay more [tax] if the money was going directly to the National Health Service (NHS) should be taken with a daily recommended amount of salt. People might say to a nice young surveyor, “Sure, I don’t mind paying a little more […]

    Read more →
  • News Glasman: Catholics should trust Labour

    Glasman: Catholics should trust Labour

    In an interview with the Catholic Hearld, Labour peer Maurice Glasman has argued that Catholics should put their trust in the Labour Party. Known for making controversial comments, Glasman begin by recognising the ways in which he feels Labour have potentially alienated Catholic voters and “all faithful people” – by failing to appreciate the family. He says that this is because “Labour has been captured by a kind of aggressive public sector morality which is concerned with the individual and the […]

    Read more →