Increasing the minimum wage – are the Tories in a tact...

Increasing the minimum wage – are the Tories in a tactical retreat?

09 January 2014

By Jennie Formby, Unite Political Director

It’s a bit rich for the Conservative party who fought tooth and nail against the introduction of the minimum wage to now propose a ‘hefty’ increase to the measure they have long derided.

There is talk of a rise of £1 per hour; the Low Pay Commission will make the decision in February.  In any event make no mistake this is merely a political tactic; a wolf in sheep’s clothing is still a wolf.  The Tories, failing to come up with a meaningful response to Ed Miliband’s relentless spotlight on the cost of living crisis, have presided over a collapse of living standards so severe that our kids will, for the first time in generations, be worse off than we are.

And in the week when the Chancellor promised a further £25 billion assault on our social fabric, no one is going to be fooled by this sudden rush of concern for the working poor.  Tory peer Lord Ashcroft’s polling at the weekend found that for the Conservatives to win outright they have to build a much larger electoral coalition.  ‘Loyalists’ can be taken for granted but more than a third of Conservative voters who supported the party in 2010 would not vote for them if there was an election tomorrow. 

These ‘defectors’ don’t feel better off.   Ashcroft’s research shows what we have always known - the Tories do not stand for fairness nor are they on the side of ordinary people - they are the party of the rich.    

And so as they desperately try to put together a coalition of voters they may have to confront what they don’t want to; that they have created a cost of living crisis and that the proceeds of the meagre economic growth we are now seeing are not being shared amongst the many.

According to the Joseph Rowntree Foundation, people have suffered a sustained and ‘unprecedented’ fall in their living standards.  Since the economic crisis the minimum cost of living has increased by a staggering 25 per cent.  For the first time more people in working families are living below the poverty line (6.7 million) than in workless and retired families in poverty combined (6.3 million). 

When it comes to the General Election, the question will be asked; do you feel better off now than you did at the start of this coalition government?  The answer will be - no!

So there you have it.  They are running scared.  Along with their allies in the media, with the Sun now supporting an increase in the minimum wage, the meaningless slogan that ‘hardworking people will benefit from the proceeds of growth’ is the new Tory mantra (neatly isolating those out of work who will be forced deeper and deeper into poverty as we are encouraged, again thanks to the Sun and crew, to regard them as the `undeserving poor’).

That’s the low politics; what’s the economic reality.  For starters, £1 isn’t enough.  The minimum wage is at its lowest level since 2005.   It’s been falling in real terms by 5.2 per cent.  Had the minimum wage been linked to inflation – still a struggle to live on as prices routinely outstrip this measure - it would be £6.68 an hour.   

But a wave of the NMW wand will not chase away the poverty of the working poor.  Again, the Joseph Rowntree Foundation has warned that it is the rise in part-time work that is the problem.  They have found, in houses earning above the NMW, significant numbers of earners simply cannot get the hours they need to bring home a decent wage.  Micro-jobs may ease the unemployment figures but they do nothing to ease poverty.  A Labour government must help wean employers off their habit of jobs that keep their employees on the wrong side of state assistance.  As Next frets that it has too much cash post-Christmas to return to the business, so it will instead heap the riches upon shareholders, this is a timely reminder that the wages of the workforce are too often the last thing on the boardroom’s mind. Unite would like companies to report on workers’ wages and efforts to improve these, alongside the executive rewards.  Sunlight, when it comes to company accounts, is an excellent disinfectant.

So, Labour, Britain needs a pay rise. Why not push for an increase in the National Minimum Wage jump of £1.50 with further incremental increases until it is equal to the Living Wage level by 2020, with all loopholes closed to end avoidance.  In a country, the seventh richest on the planet remember, where food bank use has tripled in 12 months – often by those in work - wages should be enough to live on.  And tackle too those main costs monstering the household budget – housing and childcare costs.  They are both the highest in Europe, but neither with the standards to justify this position.  Let’s see Labour come out with how they won’t just put more into pockets but make it go further too with genuine restructuring of the `markets’ that are draining the life out of our economy.

And it’s not just a moral question, it makes economic sense. Paying the living wage to the UK’s 4.8 million low-paid workers would boost public finances by £3.2 billion through increased tax income and reduced benefit and a living wage would boost government finances by around 1.5 billion.

But please, Ed, do not forget an all too often overlooked group - the millions of public sector workers in this country. They've had their wages held down since 2010. Our figures show that, as a consequence, the average local government worker's earnings are around £4,000 less than it should be. For some of the lowest paid workers in the country this is a pain too much to endure. They will struggle to understand why private sector workers doing the same job as them 'deserve' a pay rise but those who cook for our kids and care for our elderly do not. So, please Ed, look again at the pledge that a Labour government will continue to hold down their pay.

Labour can see off this Tory tactical retreat and be bold.  The unions fought long and hard for a minimum wage and its introduction by the last Labour government was the right thing to do.  Now commit to introducing the Living Wage for all and tackle those big living costs long-term.

Do it not just because it would be good for Britain, do it because it is right and do it because it is Labour, too.