The National Minimum Wage: Can’t live without it, can’t live with it

Living WageLast quarter, the UK saw the lowest level of unemployment since 2008. That’s good, right? Scratch the surface and you find another record:  five million workers struggling on or near Minimum Wage levels that have been falling further and further behind the real cost of living. These people desperately need a Living Wage. (Living Wage Week runs 3 – 9 November)

The government says falling unemployment is a vindication of their economic policies, but new research by the Resolution Foundation exposes the reality that many of the jobs created in the last few years have been, as TUC general secretary Frances O’Grady puts it, "very much of the low-paid, casual and zero-hours variety.” Furthermore, she says: "this risks many people and their families simply being left behind, unable to share in any benefit from the economic recovery."

The National Minimum Wage is clearly not working for the 5.2 million people in jobs that simply don’t pay them enough to simply get by in Britain today. True, in October, the Minimum Wage got its first above-inflation increase since 2008 (and any real-terms increase is welcome news), but there’s no getting away from the fact that the Minimum Wage still trails its Living Wage equivalents for London and the rest of the UK by £2.65 and £1.35/hr respectively. While politicians of all stripes jockey pre-election for position in the National Minimum Wage debate, even the highest pledge so far (Ed Miliband’s ‘£8 by 2020’) doesn’t add up to a living wage, as this excellent National Minimum Wage analysis illustrates.

So what’s to be done? Could a voluntary code such as the Living Wage help where statutory regulation has fallen short? More and more employers and workers are getting involved. But what about politicians? Ed Miliband calls it ‘an important idea’ and Mayor of London Boris Johnson even spent part of Monday morning launching the new London Living Wage rate himself (£9.15 , since you ask). But, beyond soundbites and photo opps, what can and should they be doing?

According to the Resolution Foundation, much of the movement’s vibrancy lies in “a bottom-up, community organising approach which has caught the imagination in a world in which worker empowerment was often assumed to be in serial decline. The question is: how can public policy support a civil society campaign without undermining these great strengths?” “A key role for the Low Pay Commission should be to encourage a debate over when employers could go further than today’s statutory National Minimum Wage. The proper arena for this debate is civil society, not Whitehall, but the state can help shift the terms of debate.” They suggest this can be done by “unleashing data into the hands of campaigners, raising the heat on social norms, and finding new ways to reward local areas for innovation.” “One thing is clear: progress is both possible and desirable. Ultimately, though, it will come down to leadership from employers, unions and campaigners.”

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