This week, rather lost amid his latest betrayal of Labour members and voters who want a Final Say over Brexit, and the subsequent scrambling to head off a potential split, was Jeremy Corbyn’s plan to hike the national minimum wage to £10 an hour.
That’s something both of those groups would likely cheer, because who wouldn’t cheer a raise for Britain’s low paid workers? It’s something I’ve backed on these pages many times.
It’s interesting to note that the wage has turned into something of an arms race between the two main parties, and an all too rare victory for those of a progressive mindset.
Corbyn’s £10 salary is higher than even what an employer needs to pay to secure the voluntary accreditation offered by the Living Wage Foundation. It sets a rate based on what an employee needs to be able to afford a decent basic standard of living, currently £9 an hour outside the capital. But it’s less than the £10.55 an hour inside the M25.
Given how suspiciously round Corbyn’s number is, a cynic might think it was plucked out of the air because it’s a nice round number that will stick in people’s minds and maybe generate a much-needed positive headline or two. The foundation, by contrast, uses evidence to set its rates, with the next increases due in November. A sensible Labour leader might have at the very least put in a call.
All three figures are well above what the government calls the national living wage but which isn’t. It will pay £8.21 from April but only to workers aged 25 and above.
It is set partly by reference to what the market will bear, but the government has made it clear that it aims to bring it up to 60 per cent of median earnings. At the current rate of increase it’s projected to hit £9.19 by 2022, which is when the next general election is scheduled, assuming the May government lasts that long. It (mercifully) probably won’t.
It has become very clear throughout this process that the market will bear higher numbers than anyone predicted, including the Labour government of Tony Blair which introduced the thing in the face of a chorus of criticism from business groups.
The private sector has adapted rather well to a higher minimum wage, far better than most economists – and especially right-wing economists – predicted it would.
Unfortunately it’s a different story with the public sector, something neither party has paid much heed to.
The rising rate there is exacerbating the impact of austerity on a range of services including the NHS, education, and local government. People who work in all these areas should absolutely be paid properly. They do difficult and often demanding jobs for little reward.
But by the same token, central government – regardless of the colour of the party controlling it – absolutely should ensure the money is made available for their employers to be able to pay what they government has mandated. That hasn’t been happening.
Another problem with the two main parties’ focus solely on rates is this: even at £10 the minimum wage should represent a floor. Ideally you don’t want to see people stuck on it for long. You want to create a situation where they can move up and into something better with the help of training and the acquisition of skills and experience. But that’s not happening.
The Resolution Foundation at the end of 2017 published an analysis into what happened to a set of low waged workers between 2006 and 2016.
A depressingly large number – 25 per cent – remained stuck on low wages throughout the period. Just one in six (17 per cent) permanently escaped. Just under half (48 per cent) bounced up but then fell back down. The remaining 10 per cent exited the data.
As its researchers concluded, the jobs done by most British low paid workers, those at or close to the minimum or national living wage, mostly don’t represent the first rung on the ladder as you would hope. They are the only rung.
That doesn’t reflect at all well on the Conservatives, with all their grandiose talk of an “opportunity Britain”.
The way the pay of low paid workers has been rising is very welcome. And it’s good politics.
But politicians from both main parties need to address the issues I’ve highlighted, and others connected to the vexed issue of low pay, at the same time.
That would be good policy-making.
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