Editorial: Enforce the minimum wage to make work pay

 

Share
Related Topics

It was Bill Clinton who, as US President, summed up what he called the old idea of the American Dream that “if you work hard and play by the rules, you ought to have a decent life”. But that sentiment applies not only to America and not just to a dream. It should be the guiding principle of any government worth the name.

Regrettably, it is not only the United States that even now routinely fails to guarantee a "decent life" for the lower echelons of its labour force. Today's Britain is not very good at it either. We are worse at it, in fact, than most of our European neighbours. In that respect it was heartening that a government minister, Matthew Hancock, agreed to address the subject of low pay head-on – in a speech yesterday to a London think-tank. And he started with two uncomfortable facts.

The median wage in the UK is £21,500 a year, and it has fallen – yes, fallen – over the past decade by 10 per cent. The economic growth of the early 2000s helped to raise incomes substantially at the very top, and to a much lesser extent – partly because of the indexing of benefits – at the very bottom, but average individual pay fell. So much for a rising tide lifting all boats – or anything akin to an equitable distribution of the proceeds of growth. It is unlikely that the lower paid were shirking for a decade.

What was positive about Mr Hancock's speech, however, was not only that a minister was addressing the issue of low pay head-on in a public forum, but that a Conservative minister in a Conservative-led coalition was prepared to concede that low pay, traditionally a cause of the left, was of concern to a centre-right government, too. And even as he recited the predictable free-market arguments about the need for a modern economy to be globally competitive and the relative advantage of a flexible labour force – reflected in the UK's relatively low unemployment rate – he also accepted that low pay could be a problem and that asking people to increase their working hours was not, in itself, a solution.

The Government's record on low pay is mixed. The rise in the income tax threshold will have taken almost three million people out of tax altogether by the next financial year, which is welcome for two reasons. Not only does it leave those on low pay with more of their own money, but it simplifies the system. That is the answer to those on the left, who argue that targeted tax credits would be cheaper and more effective in helping the poorest.

In a more typically Conservative vein is Iain Duncan Smith's welfare reform, in the shape of the universal credit, designed to ensure that everyone is better off in work than on benefits. It remains to be seen whether the incentives to take a job – or the penalties for not doing so – produce anything like the desired effect. But if they don't, this will have at least as much to do with low pay as with "overgenerous" benefits. They are two sides of the same coin.

Another, albeit ill-defined, suggestion from Mr Hancock was that the minimum wage might be "strengthened". One variant of this could be an extension of the "living wage" concept across the public sector, tailored to the local cost of living. Other employers might then have to increase rates to attract staff. At least as effective, though, would be more rigorous enforcement of the minimum wage.

All manner of stratagems are currently used by employers to evade their legal obligations – from charging for uniforms or housing, to presuming notional tips, to giving pay cash-in-hand. Such employers must feel the full force of the law. Not only because laws that are not applied are discredited, but because such practices distort the labour market and exploit those workers who most need the protection of the state.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Recruitment Genius: Customer Service Executive

£18000 - £22000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Retail Buyer / Ecommerce Buyer

£30000 - £35000 per annum: Recruitment Genius: Working closely with the market...

Recruitment Genius: Sales Executive - CAD Software Solutions Sales

£20000 - £50000 per annum: Recruitment Genius: A reputable company, famed for ...

Ashdown Group: Client Accountant Team Manager - Reading

Negotiable: Ashdown Group: The Ashdown Group has been engaged by a highly resp...

Day In a Page

Read Next
 

Letter from the Education Editor: This shocking abuse of teachers should be taken seriously

Richard Garner
Brand loyalty: businessmen Stuart Rose (pictured with David Cameron at the Conservative conference in 2010) was among the signatories  

So, the people who always support the Tories... are supporting the Tories? Has the world gone mad?

Mark Steel
War with Isis: Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria's capital

War with Isis

Iraq declares victory in the battle for Tikrit - but militants make make ominous advances in neighbouring Syria
Scientists develop mechanical spring-loaded leg brace to improve walking

A spring in your step?

Scientists develop mechanical leg brace to help take a load off
Peter Ackroyd on Alfred Hitchcock: How London shaped the director's art and obsessions

Peter Ackroyd on Alfred Hitchcock

Ackroyd has devoted his literary career to chronicling the capital and its characters. He tells John Walsh why he chose the master of suspense as his latest subject
Ryan Reynolds interview: The actor is branching out with Nazi art-theft drama Woman in Gold

Ryan Reynolds branches out in Woman in Gold

For every box-office smash in Ryan Reynolds' Hollywood career, there's always been a misconceived let-down. It's time for a rethink and a reboot, the actor tells James Mottram
Why Robin Williams safeguarded himself against a morbid trend in advertising

Stars safeguard against morbid advertising

As film-makers and advertisers make increasing posthumous use of celebrities' images, some stars are finding new ways of ensuring that they rest in peace
The UK horticulture industry is facing a skills crisis - but Great Dixter aims to change all that

UK horticulture industry facing skills crisis

Great Dixter manor house in East Sussex is encouraging people to work in the industry by offering three scholarships a year to students, as well as generous placements
Hack Circus aims to turn the rule-abiding approach of TED talks on its head

Hack Circus: Technology, art and learning

Hack Circus aims to turn the rule-abiding approach of TED talks on its head. Rhodri Marsden meets mistress of ceremonies Leila Johnston
Sevenoaks is split over much-delayed decision on controversial grammar school annexe

Sevenoaks split over grammar school annexe

If Weald of Kent Grammar School is given the go-ahead for an annexe in leafy Sevenoaks, it will be the first selective state school to open in 50 years
10 best compact cameras

A look through the lens: 10 best compact cameras

If your smartphone won’t quite cut it, it’s time to invest in a new portable gadget
Paul Scholes column: Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now

Paul Scholes column

Ross Barkley played well against Italy but he must build on that. His time to step up and seize that England No 10 shirt is now
Why Michael Carrick is still proving an enigma for England

Why Carrick is still proving an enigma for England

Manchester United's talented midfielder has played international football for almost 14 years yet, frustratingly, has won only 32 caps, says Sam Wallace
Tracey Neville: The netball coach who is just as busy as her brothers, Gary and Phil

Tracey Neville is just as busy as her brothers, Gary and Phil

The former player on how she is finding time to coach both Manchester Thunder in the Superleague and England in this year's World Cup
General Election 2015: The masterminds behind the scenes

The masterminds behind the election

How do you get your party leader to embrace a message and then stick to it? By employing these people
Machine Gun America: The amusement park where teenagers go to shoot a huge range of automatic weapons

Machine Gun America

The amusement park where teenagers go to shoot a huge range of automatic weapons
The ethics of pet food: Why are we are so selective in how we show animals our love?

The ethics of pet food

Why are we are so selective in how we show animals our love?