We need a Living Wage, not more cuts

We need a Living Wage, not more cuts

07 January 2014

By Gail Cartmail, Unite Assistant General Secretary

Osborne’s recent speech in Birmingham (Monday 6th January) is the clearest one yet that the Tories’ ideological goal of a small state will be the centrepiece of its manifesto.    

The job is not yet done says Osborne; “We've got to make more cuts. That's why 2014 is the year of hard truths,"

Welfare cuts versus low taxes is the trap that the Prime Minister and his Chancellor has set for Labour.   With hard truths - the new spin.  And it is a truth that Osborne is seeking to own for the Conservatives.

At the end of 2013 Ed Miliband was making the running by turning the economic argument into a cost of living crisis.  Freezing energy prices, scrapping the hated bedroom tax are important but they won’t be enough.   Policy choices have to be made and moving from the minimum wage to a living wage is just one area the Labour leadership should pursue.   In opposition Labour’s Leader Ed Miliband speaks up for the Living Wage yet Shadow Chancellor Ed Balls says Labour will stick with the Coalition’s public sector pay policy.   That won’t do.  The leadership need to unambiguously embrace a policy that is not only right it is also popular.   Despite the myths, there is low pay in the public sector – for example in local government alone there are 470,000 local government workers in England and Wales (but outside of London) who earn less that the Living Wage.  And the majority of low paid are women.

The scale of income inequality across the whole of the economy in the UK is dire and has grown.  For more sustainable growth incomes must be raised for those at the bottom.

CBI boss John Crigland’s New Year message was widely reported as supporting pay increases. Not so, Crigland’s forecast is that “wages will pick up in the year ahead” however his main thrust was about  an individual’s progression from a “minimum wage job”. But we know from work by the Resolution Foundation that nearly three-quarters of those in low paid jobs in 2002 were still in low paid jobs in 2012 – low pay is too often a trap not a stepping stone. The CBI’s response to the modest 1.9% rise in the adult National Minimum Wage (NMW) last year was to call for “careful monitoring”. The minimum wage of £6.31 per hour for workers aged 21 and over,  £5.03 for younger workers, creates a sizeable number of working poor necessarily reliant on state benefits. Low pay employers are subsidised by the Treasury.

Of course Government has within its grasp the power to end  poverty pay and reliance on income support. The reality is that the Coalition persists with its five year pay freeze and cap.