THE BLOG

The Growing Demand for a £10 National Minimum Wage

12/12/2014 10:33 GMT | Updated 10/02/2015 10:59 GMT

The international think-tank, The Organisation for Economic Co-operation and Development (OECD), released a report (pdf) this week which laid bare the detrimental effects of economic inequality on a country's economy. Their research couldn't have been clearer - "when income inequality rises, economic growth falls."

The OECD's evidence showed that income inequality has a negative impact on economic growth by undermining and hindering the educational opportunities for disadvantaged individuals. This decreases social mobility and hampers the skill development of the individual which, over the medium term, strangles the potential for economic growth of the country as a whole.

The OECD's report revealed that the gap between richest and poorest is now at its highest level for 30 years. Today, the richest 10% of the population in the OECD area now earn 9.5 times more than the poorest 10%. By contrast, in the 1980s the ratio stood at 7:1.

It wasn't only the OECD which was arguing for higher wages this week. The charity, Oxfam, released a report advocating the Living Wage for social-economic reasons. Oxfam believe that a Living Wage is a "human right" as it allows individuals "to participate in social and cultural life and afford a basic lifestyle considered acceptable by society at its current level of development."

Oxfam point out that:

"When a profitable company does not ensure a living wage is paid, it is pushing onto the most vulnerable people in its supply chain the negative impact of its business model. This is unfair and unsustainable."

We are now in a crisis situation in the UK. We have the scandal (pdf) of working families being forced to rely on foodbanks to feed their family and we are seeing a rising amount of people who are working but are still living below the poverty line.

The political class must urgently take heed of these warning signs but they seem utterly incapable of taking hold of this issue. The Tories and the LibDem coalition has only exasperated inequality with their pro-austerity agenda and their neo-liberal mind-set of giving tax breaks for the richest while cutting the incomes of the poorest.

Labour aren't much better - they claim to be against poverty pay, proudly parading their headline policy of an £8 per hour national minimum wage but, scratch beneath the surface and we find that their headline policy is the equivalent of blowing into the wind. Labour think it is justifiable to delay this paltry raise until 2020 rather than championing an £8 per hour NMW now. To give you an insight to the ineffectiveness of Labour's proposals, if the NMW is raised by only 2.5% each year between now and 2020 then it would be £7.53. I'm unconvinced that the extra 47p per hour that Labour extoll would have any impact whatsoever on the growing inequality that the UK is facing either in 2015 or in 2020.

One option that is slowing coming into mainstream political debate is raising the NMW to a level whereby workers are paid a decent wage. The Scottish Socialist Party has campaigned since 1998 for a National Minimum Wage which is two-thirds of the male median salary - that's about £10 per hour in today's money. The SSP are not alone in supporting this policy. It is also advocated by the Green Party, on both sides of the border, and was passed unanimously at a recent TUC conference in Liverpool.

It wouldn't just be low-paid workers that would benefit from a £10 per hour NMW - the whole of our society would be enhanced by the introduction of a decent wage. The increase in taxation revenues that this policy would generate and the savings that would occur by removing the need for in-work benefits would revitalise the public purse. Austerity would no longer be on the agenda.

Equally importantly are the effects that this policy would have on local communities throughout the country. This policy would eradicate in-work poverty and the pressures and stresses that that brings. No longer would people work hard all week and still struggle to get by.

It isn't hard to find evidence of income inequality in the UK. One easy way of showing the blatant inequality in our society is by comparing the rises in NMW against the raises of CEO salaries over the same time period. If the NMW had risen at the same rate a CEO's salaries then the NMW would now be a whopping £19 p/h. With that in mind, a £10 per hour NMW does not seem too much to ask.

In the 1980s, at the height of Thatcherism, the idea of a national minimum wage would have been written of a totally unworkable policy that was based on anti-business, idealism. The idea of a £10 per hour NMW may appear unreachable and critics may claim that is is 'anti-business' but, ultimately, this is a medicine that has to be swallowed if we want our economy and our fellow citizens to reach their fullest potential.