The Blog

We Need to Talk About a Living Wage, Not a Minimum Wage

Ed Miliband is right to say of a raise in wages that 'It is about saying that this country does not work for millions of working people and we are going to change it.' He needs to follow his own argument to its logical conclusion.

It's great that Ed Miliband has announced plans for the minimum wage to rise to £8 by 2020. The timing of the announcement and the way in which the media ran with it indicates that Labour will put incomes policy on the centre-stage of its 2015 campaign. Anything that in some way improves the lives of those struggling on an outdated below-subsistence minimum wage has to be heralded as a step forward. And yet it has to be said that the actual rise itself is piecemeal. According to some reports, the average minimum wage increase from 1997-2010 was 4.92%. If this was kept up, it would £9.87 by 2020. When we take the soaring cost of living into account, what amounts to a 20-25p rise per year is not very much at all. Given that Labour have put these issues on the agenda, they should follow through by demanding the living wage for all. The rise announced will lift many out of poverty if implemented, but it will do nowhere near enough. And it is a shame that Labour have simultaneously announced that they will continue to cut child benefit.

The Living Wage wouldn't be new to the Labour Party. In 2012, David Miliband and Dave Prentis, Unison leader, cowrote an article in the Guardian arguing the benefits of London being made a Living Wage city. When I was a Labour council leader, I worked to make Tower Hamlets the first London Living Wage (LLW) borough. Now lots of other authorities have followed suit, and the business world are getting involved as well, with Canary Wharf Group announcing this week that they will pay the LLW to all their staff. Meanwhile the Green Party are arguing for a£10 an hour minimum and Switzerland have held a referendum on providing a universal citizens' income for everyone. From the mass strikes of fast food workers in the US to the Tres Cosas campaign at the University of London, grassroots pressure on pay and conditions is rising. Perhaps Labour are playing a very moderate hand simply because of how far the centre-ground has shifted rightward as it is dragged along by the politics of austerity. But that is more reason than ever to resist such a tide.

Before we make any economic arguments, a living wage is a minimum moral standard. It is not a 'benefit' or 'handout', it should be a basic entitlement. A fair day's work should enable a worker to be able to afford bills, good accommodation, transport and food, with money left over for leisure time and personal development. Nonetheless, higher wages do even more than help the millions of workers who would benefit from them. Simply put, the poorest spend the fastest and most efficiently. More money in the pockets of workers means more money fuelling the businesses that workers shop at, and thus more tax money in the hands of authorities to spend on public services and life-enhancing projects. Higher wages increase the productivity of labour by ensuring that workers are provided for, not worried about their finances and given a greater sense of the value of their contribution. We have bailed out the banks. We have printed money and handed it to banks who have sat on it and failed to invest. A high-standard living wage would bail out the economy from the bottom up rather than the top down. Parliamentarians voted recently to give themselves a pay rise. Why can't they do the same for those whom they represent? And if the Government, as it claims, is so eager to slash the benefits bill, we should not be subsidising businesses who refuse to pay their workers adequately by having to use the sticking plaster of in-work benefits.

The issue is particularly pressing because the Conservatives' narrative coming into 2015 will be the idea that their neatly-hashtagged #LongTermEconomicPlan has decreased unemployment. Even George Osborne is talking in the Clement Attlee-style language of 'full employment.' It is carefully-calculated deceit that covers up and drives poverty away from the unavoidable coalface of unemployment statistics (and it is worth noting that unemployment blackspots are still everywhere.) In academic circles, the term 'precariat' is becoming ever more widely known, to describe those in casualised and underpaid labour. Zero-hour contracts and workfare are a part of this, with workers everywhere from Poundland to top universities struggling. The Joseph Rowntree Foundation reported at the end of 2013 that for the first time ever, more in-work than out-of-work households were in poverty. Meanwhile migrant labourers face barriers to being able to demand decent pay and conditions, enabling unscrupulous employers to exploit migrants and undercut other workers. It's time to make work pay.

Ed Miliband is right to say of a raise in wages that 'It is about saying that this country does not work for millions of working people and we are going to change it.' He needs to follow his own argument to its logical conclusion. Labour are, as I said, to be commended for helping put incomes policy into the national conversation. But when it comes to wages we need to be talking not just about subsistence, but dignifed existence.