Leading Article: We voted for it, we need it, so where is our minimum wage?

Click to follow
The Independent Online
The heavy weather and long grind are indicative of the Government's priorities. It is being made clear that the national minimum wage will not come into effect until the end of next year at the earliest. Margaret Beckett published the Bill yesterday, but it is an enabling measure, with the details - including the level and some of the scope of the minimum wage - to be set out in regulations later. The bits that matter will be decided after the Low Pay Commission reports next spring.

Not that we should be surprised by the delay. Labour never promised a timetable, and Tony Blair's defensive posture on the issue bears the scars of having defended the policy - and the level of pounds 3.20 an hour - as employment spokesman at the 1992 election. But there is no need for it to take this long: there is a difference between consultation and procrastination.

The principle of a minimum wage is simple and it is right. The most powerful argument is not directly one of social justice, but of practicality. It is wasteful and perverse for taxpayers to subsidise employers who undercut their rivals by paying lower and lower wages. Given that the state, for reasons both of the common interest and of social justice, supplements the wages of many of the lowest-paid through Family Credit, allowing a free-for-all at the bottom end of the labour market simply invites abuse.

The minimum wage should be central to the Chancellor's ambition to unify the tax and benefits system, mainly because it would simplify Family Credit and increase the likelihood that people on benefit would be better off in work. By coincidence, the Chancellor and the Secretary of State for Education and Employment published a joint paper yesterday called "Employment Opportunity for All". It is all about how to move people from welfare to work and "make work pay", and of course it mentions the minimum wage, but it is hardly stitched into New Labour's banners and held high. The minimum wage ought to be the starting point: it makes sense, it is the settled policy of the Government, it enjoys overwhelming public support and it forms the platform on which reform of the tax and benefit system should be built.

So, why should the Government not ask Professor George Bain, the chairman of the arm's-length Low Pay Commission, to come up with a figure by Christmas, knock off 5p an hour, and legislate in the New Year?

Well, there is one important issue of coverage to be settled, and that is the extent to which the minimum wage applies to young people. Here, the Government seems to have trod unnecessarily warily on the sensitivities of the trade unions. It was Peter Mandelson, the "minister for looking ahead" as he described himself, who looked ahead and by mistake shared what he saw with a fringe meeting at Labour's Brighton conference last month. "I think there will be a differential," he said. "That is the right course of action."

This was deemed so inflammatory that the Prime Minister's press secretary sought to distract journalists' attention by retelling a tasteless line from Tony Banks's Tribune Rally speech about William Hague's likeness to a foetus, in order to say how much Mr Blair disapproved of it.

And, no, most of the unions did not like it much. They are suspicious of Mr Mandelson, and of any weakening of the minimum wage. Indeed, if the argument for a minimum wage is an argument from citizenship, then delaying the age of majority to 26 would seem a controversial and retrograde step. But that is not the argument, and the economic case for a lower rate for people up to the age of 25 is overwhelming. We only have to look to the catastrophically high levels of youth unemployment in France to understand that. Citizenship is all very well, but not worth much without the chance of a job. This is not a complicated or difficult case to make. Young people should be protected by a lower rate, rather than exempted altogether.

All that remains is for the Government to persuade a minority of small businesses that it can "make water flow uphill", in the graphic phrase of the former Prime Minister's policy adviser, Sarah Hogg. Of course, there will be some shake-out. Some jobs will be lost. "Any damn fool knows that," as the Deputy Prime Minister once declared. But it is possible that the increased spending power of the low-paid will create jobs. And there is limited evidence from the United States that in some sectors reduced staff turnover and increased productivity leads to new jobs.

The case for a minimum wage is clear and strong. If the Government believes its propaganda about unscrupulous employers fleecing the Family Credit budget and driving to the wall high-minded rivals who are trying to compete on quality in world markets, then it should hurry up and act.

Comments