Even hamburger flippers have to eat

Without a minimum wage, government will continue to subsidise poorly performing businesses
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The really low-paid don't get to hold seaside conferences, or denounce ministers on the Today programme, or threaten to strike. The hamburger flippers, the office cleaners, the hairdressers are mostly un- unionised. They have no leaders and few advocates in the national media. They are our neighbours and we depend on them. But, politically, they are almost invisible.

It wasn't always thus, and it is about to change. Back in 1909, introducing an early version of wages councils, Winston Churchill called it ''a serious national evil that any class of His Majesty's subjects should receive less than a living wage ... where you have what we call sweated trades ... the good employer is undercut by the bad, and the bad employer is undercut by the worst''.

The wages councils he instituted, except for agriculture, were finally abolished in 1993, since when there is evidence that both employment and wages have further declined. They may have gone, but the issue hasn't. The Conservatives have now locked on to Labour's plans for a minimum wage as being a key battleground for the next election. Labour has long agreed: this week the party leadership has backed Harriet Harman's radical rewriting of the policy. For the first time, Labour is about to go on the offensive over poverty pay.

If the issue was tested today, Labour would lose, for everyone ''knows'' that a minimum wage is a bureaucratic job-killer. Yet all our competitor economies in Europe and America have wage floors, ranging from pounds 1.50 an hour to over pounds 4 an hour, and relatively few have had a worse rate of employment growth over 1980-93 than Britain.

The rising economies of Asia don't, it's true. But we are not talking about a dramatic change to the British economy. According to a paper by Mary Campbell, to be published by the Business Strategy Review next week, a minimum wage of pounds 3.40 would directly increase the national wage bill by only 0.36 per cent.

For a party that is theoretically committed to sturdy individualism, the Conservative position on all of this seems odd. It accepts that there are thousands of businesses which are doing so badly that they cannot afford to pay their employees a living wage. Yet instead of saying, "all right then, fail", the Government stuffs them with subsidy. They are helped not directly but through Family Credit and other benefits without which their employees would be unable to live decently.

Why should we say that the employers, not simply the employees, are subsidised? Aren't employers entitled to pay any wage they can get a person to take, however low, without worrying about what the state does?

That's only so, surely, if you take an utterly reductionist view of business as an activity outside society, somehow unconnected to the state. This is clearly nonsense, since business depends heavily on the law, on public infrastructure, education, labour law and all the systems that provide a stable modern economy. Without these goods, most businesses would swiftly collapse. By enjoying the benefits of a developed society without paying his or her share of the social cost of its labour, a poverty-pay employer is leeching off the taxpayer.

These subsidies, already growing fast, are set to explode under the current government. One in seven people working in catering, cleaning and hairdressing are among the 600,000-plus getting Family Credit.

But a pilot scheme is already running for a similar subsidy for childless low-paid workers. If that goes national, there will be a huge increase of public subsidy to low-wage employers. It will amount to the creation of a dependency culture for public companies. There will be less incentive to pay decent wages, while the welfare bill will rise and politicians will get the blame.

As for the pay-cutting employers, on current form nobody will ask them when they expect to make enough to stand on their own two feet, without relying on hand-outs to keep their staff in food and housing. They may think of themselves as sturdy individualists, but they are, in truth, nearer to sturdy beggars, pensioners of the state.

All of which raises the question of what would actually happen to employment if a minimum wage was introduced. Would the beggars up and walk?

Companies may tell people carrying out surveys for political parties, or the CBI, that they would certainly sack X number of employees if forced to pay a wage of Y per hour. But they have every incentive to inflate the potential sackings in order to scare off the policy-makers.

The rest of us are entitled to be sceptical. After 15 years of management culture and efficiency drives and international competition, how many such companies are today employing many more people than they need? Not that many. If they want to keep their current contracts, most will want to keep their current staff, too. Any figure about job losses, however firmly asserted, and whomever it comes from, is bound to be bogus, more rhetoric than statistic.

Yet some jobs will be lost. Trying to limit them has been Harriet Harman's biggest single task. Before, Labour was committed to setting a fixed figure, based on average earnings. Union leaders were demanding pounds 4.15 an hour or thereabouts and asserting that anything less would be ''meaningless''. But, one has to ask, meaningless for whom?

Harman has reminded the party that there are about 1.3 million people earning less than pounds 2.50 an hour. These are the people Labour needs to worry about most. Labour could set a wage floor well below the union figure and still perform a useful function. Harman has ditched the formula and, so far, and rather to her surprise, has not been lynched for doing so.

But the main Harman proposal is that a Labour government should set up a permanent Low Pay Commission to negotiate with employers in different sectors and parts of the country about the effects of bringing in a national wage floor; this would then be done in stages and by consultation to limit the job losses.

It is surely right to work by negotiation, though where companies say they are unable to pay decent wages, they should also be put under pressure. They should be able to apply for a further exemption while the commission pores over their books. But they should be regarded as business failures in need of help, and their identities made public.

For too long too many of us who are relatively well paid have been a bit smug about low pay. It has been the unfashionable issue. There has been a shallow, free-market determinism in the air, a hands-in-pockets, cheery whistle of dismissal whenever the subject is raised.

Well, that era has passed. For the next couple of years, as both Labour and the Conservatives fight over the minimum wage, the rest of us will be forced to think harder and more honestly about low pay. It is not before time. What Churchill thought a ''serious national evil'' a lifetime ago is just as serious and just as evil today. Let the battle commence, for millions are watching.

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