Cast your mind back nine years to a time when the Labour party had recently stormed to power and a wave of public optimism still swept the nation. We may have been duped but back then Labour did implement some radical reforms. Now, as the poorest members of society are struggling to cope with rising food and utility bills, it is time for the government to revisit one of its most successful policies, the minimum wage.
It is clear that the introduction of the minimum wage improved the circumstances of many workers, and even Conservative critics now back the policy, with the predicted negative impact on businesses never materialising. £5.52 per hour, however, is no longer enough and as the minimum wage has failed to increase in line with inflation its impact has diminished.
Labour should now go further. Introducing a national living wage - which allows anyone in full-time employment to enjoy an acceptable standard of living - would do more than any of the policies being mooted at present to tackle the impact of the ‘credit crunch’ on the poorest workers.
London is already leading the way with its own living wage. Without enforcement, however, the majority of employers have understandably chosen to stick with the national minimum wage. The Living Wage Employer Award hopes to change this. Stephen O’Brien, joint president of London First, described the award as “a new and much anticipated mark of socially responsible business practice". “A growing number of high profile organisations are now part of the Living Wage Employer Group and London 2012 is set to be the first ever living wage Olympics.”
While the benefits of a living wage for workers and society are obvious – social cohesion, higher living standards, lower crime levels, improvements in health, greater incentive to work - there are also many benefits for employers. A KPMG report stated that since becoming a living wage employer the Royal London Hospital reduced its cleaning staff turnover by 50%. Furthermore, better pay means higher productivity and a happier and more motivated workforce.
Even Mayor of London Boris Johnson, who opposed the national minimum wage, is an advocate of the London living wage and earlier this year increased it to £7.45 per hour. “This is not only morally right but makes good business sense contributing to better recruitment and retention of staff, higher productivity, and a more loyal workforce with high morale,” he said. It is a sad state of affairs when a Tory such as Johnson is the one defending workers’ rights and the Conservatives are claiming to be the party of the poor. They will not fool many but there is, at the moment, no alternative.
London may have been an exceptional case in the past but nationally wages of average earners have remained almost static in recent years and those of the bottom third fell between 2004 and 2007. A national living wage would help to change these damning statistics. If Labour want to tackle poverty they should export the living wage to the rest of the UK. By implementing a national living wage, perhaps with regional variances, they would be able to help those most at need.
Business leaders would plead poverty themselves, as many did prior to the introduction of the minimum wage, but the cost would not have to sit solely with them. By increasing the tax free allowance the government could, in effect, pay much of the cost itself. Public opinion, for a change, would be behind them with a recent Harris poll showing that the majority of people favoured lowering taxes for the poor. The same poll also showed the majority in favour of higher taxes for the richest, but that would surely be asking too much from a government in thrall to the super-rich.
How to decide the level of the living wage would be a contentious issue. However, the results of a recent research project carried out by the Joseph Rowntree Foundation calculated the amount of money required for a ‘socially acceptable standard of living.’ The report concluded that ‘a single adult, working full time, needs to earn £6.88 per hour to reach this weekly standard.’ The study also found that the minimum income standard calculated was higher than the current threshold for relative poverty. The government’s already poor record on tackling poverty, therefore, is even worse than current measures indicate.
Julie Unwin, director of the foundation, said: “This research is designed to encourage debate and to start building a public consensus about what level of income no one should have to live below.” If Labour, whoever their leader is, want to regain the trust of core supporters and improve their chances before the next election they need to be the party leading this debate. Back in their heyday they fought hard to introduce a national minimum wage; they should now do the same for a national living wage.
The Joseph Rowntree Foundation report can be found at the following address: www.jrf.org.uk/kowledge/findings/socialpolicy/2244.asp