On Monday almost a million workers received a pay rise, sort of. These workers, most of whom are women, are those who occupy the many jobs up and down the country that pay the National Minimum Wage (NMW). For anyone scanning the job centre website you'll see plenty of these jobs. They are the ones that, rather than giving a figure in the 'wage' column, just say 'Meets Nat Min Wage'. If they did list the actual wage it would read, after Monday's changes, £11,266 a year or a paltry £6.19 an hour. These workers are the people who serve you in shops, clean the floors on which you walk and look after your elderly relatives.
Yesterday's 'pay rise' saw these hundreds of thousands of people begin to receive an extra 1.8% in their pay packet. This annual 'boost' to the NMW is, once again, a wage cut in real terms when compared to inflation which runs at 2.5%. According to the Joseph Rowntree Foundation this new wage is a full £5000 short of what they describe as a 'minimum acceptable standard of living.' Have no doubt about it; life on the minimum wage is tough and will be even tougher next year than the one which just passed.
The change in pay for those on the NMW has coincided with Labour's autumn conference and the plight of those in working poverty hasn't been ignored at the party gathering in Manchester. On Tuesday Liam Byrne talked on the radio about the importance of 'making work pay' as a key component of helping those at the bottom of the income scale. His colleague Rachel Reeves used her slot on the main conference stage to praise Labour councils who have already or are planning to become Living Wage employers. Of course Reeves is right to point to the real difference that the Living Wage makes to those moving onto it from the NMW. Unlike the NMW, the Living Wage actually takes into account the rise in people's cost of living when it is calculated.
While politicians have a say over the pay of government workers, they cannot force private companies to pay workers Living Wages. It is these private companies, many of them having been in the limelight this year for excessive pay at the other end of the scale, who must now step up to the plate. With some notable exceptions the vast majority of the UK's biggest stock market listed companies- the ones owned by our pensions funds- pay either some of their directly employed or contracted workers less than the Living Wage.
If we are to become a 'one nation economy', as Ed Miliband wishes, corporations, as well as government must speed up their efforts to boost the incomes of the lowest paid in our society. It makes sense for the businesses and their shareholders when they see staff retention up and time off sick down. It makes sense, as One Society point out in their latest briefing, to economic growth as increased pay at the bottom is likely to be spent in the real economy. It makes a difference to cutting the deficit, as people on Living Wages don't require the same level of government tax credits to support them. And finally, and most importantly, it makes a real difference for the workers and their families whose lives are genuinely changed by a pay packet that reflects their basic needs.
Since its introduction in 1999 the Minimum Wage has indeed helped hundreds of thousands of people. It is a lifeline but, to enjoy a decent quality of life, it simply isn't enough. In London the Conservative party under Boris Johnson has pushed up wages for the lowest paid government workers. The last few days have shown the Labour Party to be champions of the Living Wage too. Let's hope the chief executives of Britain's biggest corporations, many of whom can easily afford to increase pay for workers at the bottom, have, in this case, been inspired by the politicians.
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