Labour outlines plan to ensure minimum wage is in line with cost of living

Katie Neame

Labour has outlined a plan to reform the national minimum wage to ensure that it is in line with living costs, declaring that the change would mean the national living wage would finally “live up to its name”.

The opposition also announced that it would axe lower pay brackets for younger workers. The minimum wage for workers over the age of 23 is currently £9.50 per hour. But 21- and 22-year-olds receive £9.18 for each hour worked and 18- to 20-year-olds just £6.83.

Setting out Labour’s proposals in a piece for The Guardian today, Angela Rayner and Rachel Reeves wrote: “We are proud that the last Labour government created the national minimum wage. We won the argument then, but we now need to go further to help restore dignity at work and make sure work pays.

“That is why the next Labour government will change the Low Pay Commission’s remit so that – alongside median wages and economic conditions – the minimum wage will for the first time reflect the need for working people’s pay to at least cover the cost of living. Finally, the national living wage will live up to its name.”

Labour’s deputy leader and the Shadow Chancellor declared that young adult workers are currently getting a “raw deal” on pay, adding: “Their bills aren’t any cheaper, but they have to make ends meet with less.

“That’s just not fair. Labour will take steps to ensure our genuine national living wage applies to every adult worker and is properly enforced.”

Rayner and Reeves wrote: “Those living in poverty often describe the feeling in the pit of their stomach, worrying about how ends will meet. That feeling is all too widespread on the streets of today’s Britain, with women and those from underrepresented backgrounds more likely to be consigned to poverty pay.

“Labour will ensure that working people are not just seen as collateral damage from an economy that is not working. While the Conservatives threaten the limited rights people already have, we will guarantee a real living wage and strengthen individual and collective rights for working people.”

Reacting to Labour’s proposals, TUC general secretary Frances O’Grady tweeted: “Everyone who works for a living deserves to earn a decent living.

“But UK workers are suffering the longest pay squeeze in 200 years, and millions are trapped on poverty wages. [Angela Rayner] and [Rachel Reeves] are right. We need to make work pay.”

The ONS released its latest labour market statistics on Tuesday, which found that real-terms regular pay fell by 3% over the last quarter when adjusted for inflation – the fastest decline since comparable records began in 2001.

Commenting on the findings, the Shadow Work and Pensions Secretary Jonathan Ashworth said: “Today, we see yet another record fall in real wages, and further proof that the Tories have lost control of the economy.

“Because of the Tories’ failure on the economy, families face plummeting real wages and soaring energy bills. Yet, this zombie government is offering no solutions to the cost-of-living crisis.”

The ONS revealed that average total pay (including bonuses) and regular pay (excluding bonuses) grew by 5.1% and 4.7% respectively between April and June. But its analysis found that, when adjusted for inflation, total pay fell by 2.5%, while regular pay fell by a record 3.0%.

The ONS announced on Wednesday that UK inflation had risen above 10% for the first time in 40 years, with rising food prices cited as the primary cause of the increase between June and July.

The Bank of England predicted earlier in August that inflation will continue to rise in the coming months, to around 13%, largely as a result of increases in the price of gas. It projected that the UK will enter recession from the fourth quarter of the year and that real household post-tax income will “fall sharply in 2022 and 2023”.

Matthew Lawrence, director of Common Wealth, told LabourList: “This policy is a step forward but the party could and should go further. Defeating the cost of living crisis and shifting the balance of power toward workers will require bold and ambitious change.

“As we and other organisation’s have called for, significantly strengthening trade union rights and guaranteeing security for all with a Living Income can go a long toward this.”

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