After 20 years of the minimum wage we must celebrate its achievements and focus on future action, writes Richard Angell
The 20th anniversary of the national minimum wage is a great milestone. It was a symbol of action after 18 years of inertia. It showed the state could be effectively deployed for our Clause IV – at the time refreshed and refocused – and show that politics, not populism, is what delivers results. 1.5 million people – two-thirds of them women – got a pay rise. It was also an blueprint for the radical becoming mainstream. In the 1980s serious parts of even the trade union movement had thought it too radical, but by 1996 the Federation of Small Business was endorsing it ahead of the general election. Rather than divide and rule our politics, the left sought to unite the country behind fairness.
Labour in office delivered year on year – increasing the minimum wage without causing inflation. Alongside a suite of policies it improved the lot for those at the bottom of the economy and reinforced the underlying fairness of the government’s fiscal policy – the 10p tax rate, tax credits, the saving gateway.
Twenty years on the naysayers have been slayed and even the Tories support it. George Osborne tried to bask in its accomplishments by rebranding a higher minimum for over 25s as the ‘National Living Wage’. There was much promise that it would reach £10 per hour by 2020 which – to the surprise of few – it now looks set to miss.
So what can progressives do to build on the legacy of the minimum wage and to increase low pay, 20 years on?
One, legislate for a £10 per hour minimum wage now. The economy needs spending power – something that a higher minimum wage would create. And with Britain’s companies stockpiling cash, they can afford it.
Two, stop the minimum wage being a maximum wage. Too many employers ‘pride’ themselves on not being NMW employers, but in reality only pay more than 10p per hour more than Low Pay Commission set rate. Parliament should legislate so employers cannot advertise this status unless they paid more than 10 per cent more. Former government minister Hazel Blears has talked about this a lot. It is time for action.
Three, let local councils enforce the NMW. The same employers that breach their various licences, health and safety legislation and commit other such exploitative practices are already known to most local authorities and are more likely be evading this minimum payment too. This change would be efficient and effective. Local government keeping the money from any fines could increase compliance and fund important local services.
Four, build consumer support for paying the real Living Wage. Government should provide seed and annual funding, via the LPC, to ensure a Fair Wage kitemark – a domestic version of the Fairtrade kitemark. Consumer brands could then display it on products and retail venues. The power of moral and social pressure can be brought to bear to bring about better wages for the low paid. Companies can aim for an accredited ‘gold standard’ by narrowing the chasm between their highest and lowest paid employees.
Five, tax breaks for trade unions taking on members on the NMW or very near. Government could even compel employers paying low rates to make a contribution to the union. This would improve representation for the poorest workers and give some additional and much needed industrial strength. USDAW – the retail union – is a brilliant and focused union but it has the hardest of industrial tasks. It has to recruit over 70,000 people a year just to stand still, because the turnover of personnel in low paid Britain is so high.
Six, create learning accounts for those on the NMW or within 10 per cent to help them pay for skills and training. The residual problem with low pay is that is it a trap. We need to give people ladders out. Professional development and training is key but often unaffordable to people who are economically and time poor. Remove the financial barrier and it is amazing what people can achieve for themselves and their families. A Labour government should be at their side and giving them a leg up.
Low paid Britain needs a pay rise, but the persistence of low pay needs a multi-pronged attack. Not all of this has to wait for government – just an approach that politics, not populist empty promises, can improve the lot for Britain’s low paid.
Richard Angell is director of Progress. He tweets @RichardAngell
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