A blueprint to lift one million people out of low pay by 2020 is published today, and could adopted by Labour if it wins power at next year’s general election.
A commission chaired by Dr John Sentamu, the Archbishop of York, calls on the Government to champion the gradual introduction of a living wage higher than the national minimum wage in sectors that could afford it. But it rejects the idea of imposing a higher wages floor by law.
The living wage is currently £8.80 an hour in London and £7.65 an hour outside the capital. The minimum wage is £6.31 an hour.
Crucially, the Living Wage Commission includes business representatives as well as trade unions. Dr Adam Marshall, director of policy at the British Chambers of Commerce and a commission member, said: “Many thousands of companies already pay their employees a living wage, and many more have an aspiration to do so. As the recovery gathers pace, they should be supported and encouraged to make this happen without facing compulsion or regulation, which could lead to job losses and difficulties particularly for younger people entering the labour market.”
Today’s report argues that the problem of in-work poverty, with 5.2 million people earning less than the living wage, could be tackled without any damaging economic consequences.
The cost of raising the pay of 500,000 public sector workers to the living wage would be more than recouped higher tax revenues and lower in-work benefits if 600,000 private sector employees were raised to that level. Accountancy, consultancy, banking and construction firms could afford to pay the living wage as it would add less than 0.5 per cent to their pay bills. But the retail and hospitality sector and many small companies could not afford it.
The commission proposes that the Government commits to ensuring least one million more employees earn the living wage by 2020 so people do not have to rely on food banks and unsustainable debt. Companies listed on the Stock Exchange should have to publish how many people they employ on less than the living wage.
Dr Sentamu said: “Working, and still living in poverty, is a national scandal. If the Government now commits to making this hope a reality, we can take a major step towards ending the strain on all of our consciences.”
Chuka Umunna, the shadow Business Secretary, said: “This report makes a powerful and timely case for tackling the growing scandal of low pay.”