If the government really wanted to cut its benefit bill, it would ensure that employers give their workers a living wage
How did Britain turn so docile, so passive, so obedient? In both good times and in bad, real wages fell, the cost of living rose and the proceeds of growth were sucked up to the rapacious upper echelons. Yet even now, when real wages have fallen to their lowest since 2001, the question of shrinking pay hardly makes it on to the political radar.
A Rip Van Winkle from 1979 would be astonished that earnings have all but evaporated from British politics, as if pay were as ineluctable as the weather. Long before the crash, the wage share of GDP slid from 61% to 56%, money syphoned out of working pockets into profits in the longest wage squeeze in more than a century. Broken union power since those days was painfully displayed in the humiliation of Unite at Grangemouth. With no one to stand up for employees, money flows to the employers, take it or leave it.
On Monday, this year’s new living wage rate will be set, currently £8.55 an hour in London, £7.45 elsewhere. It’s calculated annually by the Joseph Rowntree Foundation’s minimum standard, a sum set by what public opinion says is the least people need for a socially acceptable standard of living. A man should have a pair of shoes and a pair of trainers. A child should have four outings a year to a zoo, farm or Christmas panto. Parents should be able to afford a £50 birthday present for a child, plus £50 for a party. That’s luxury for those surviving on less, with the minimum wage at just £6.31. There are five million full-timers earning less than £13,350.
The Resolution Foundation persistently ferrets out the facts that show how the number of working people who earn below the living wage keeps rising. Two-thirds of poor children have parents who work: the social crisis is in pitiful pay, not welfare dependency. Women, the young and those outside the south-east are most likely to fall below the threshold; nearly a quarter of employees have in Wales. Hotels, catering and social care are the worst sectors.
The Living Wage Foundation has campaigned for a decade, brilliantly establishing the idea of a decency threshold that politicians dare not deny. The national minimum wage has nothing to do with decency: it’s set by the low pay commission according to what it thinks market will bear, regardless of whether people can live on it. Since it began in 1999, the commission has let the real value of the minimum wage slide back by £1,000.
Citizens UK, originator of the living wage, works with a community base of faith and other groups to persuade and shame employers, not by demanding with menaces. It has 420 signed-up living wage employers, including 17 councils, with more to be announced. It has captured the imagination and raised political awareness, so every party pays it homage and no party leader in elections dares not appear at its rallies and to hear heart-rending testimonies of hardship from the low–paid.
But success has been slow: 30,000 workers are directly covered by these official living wage employers, with some 250,000 estimated to get the living wage because of the campaign. But so far asking nicely has only taken a flea bite out of the body of 4.8m people still working below that decency line.
Meanwhile, at the top FTSE 100 boardroom pay rose again by 27% last year, while real wages fell. No significant change is happening to the structure of pay. People are disgusted by super-greed and George Osborne’s cutting of top tax – and yet passivity reigns in the face of gross injustice. Instead, wrath is skilfully misdirected by this government towards immigrants or the unemployed.
The chancellor’s autumn statement will offer cheery projections for growth and jobs, but others warn that wages falling below inflation year after year may choke off his recovery. JP Morgan reports that the failure of wages to rise is “the missing piece in the recovery so far”. Whose recovery is this? With 10% of those in work underemployed and unable to get longer hours, the economist David Blanchflower suggests “recovery” may yield neither many more jobs nor higher wages nor more spending money. In this new cold climate, no one knows if unemployment will fall enough to cause wages to rise – or where that tipping point comes.
What could be done? The Treasury would save £3.5bn if the living wage became the minimum wage in the private sector, by receiving more in tax and paying less in tax credit subsidies. Even paying the living wage in the public sector saves £2.2m, according to the Resolution Foundation. What better way to cut the benefit bill?
Before Margaret Thatcher abolished them, wages councils set minimum pay affordable for each sector. Both Labour’s pay review by KPMG’s Alan Buckle and the Resolution Foundation’s review by George Bain, first setter of the minimum wage, are likely to recommend a return to compulsory sectoral pay rates, sensitive to what employers can genuinely afford. The big supermarkets could well afford to pay their staff the living wage – if they knew they were all in it together. So could the social care sector, if the state faced up to a better way to fund care, with decent pay and training for care staff – with a ban on zero hours.
Equal pay day falls on 7 November, the day women stop being paid because of the gender pay gap. Forcing equal pay audits, so employers had to reveal how much less they pay women, along with rights for higher paid jobs to be part-time, might end the pay gap – which stands at 35.6% for part-time women.
For the long term, power needs to flow back towards the utterly powerless employee. A German-style seat on the board, as well as on the remuneration committee, helps contain top greed. Why not oblige every employer to allow in trade union representatives regularly to talk to staff about representation? That requires trade unions too to make themselves more attractive to those who have never encountered them before. Companies should be obliged to publish their pay ratios, from top to bottom.
Ed Miliband is making a speech next week on the living wage. The first principle has to be this: a single person working full-time should, as a minimum, be able to live at what the public considers a socially acceptable standard of living without the need for state subsidy. Miliband has made the cost-of-living crisis and rip-off prices his own. Now he needs to make pay political too. As one of his advisers says: “Pay is the dog that doesn’t bark.” Yet.
Link to article: feeds.theguardian.com/c/34708/f/663908/s/332957c3/sc/7/l/0L0Stheguardian0N0Ccommentisfree0C20A130Coct0C310Cwelfare0Edependency0Eisnt0Eproblem0Epitiful0Epay/story01.htm