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.

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