will a 20p rise in the minimum wage make any difference?

With low pay, cuts to welfare benefits and a rising cost of living pushing more and more people into poverty, we think it’s time for a rethink.

by Matthew Whitehouse
03 March 2015, 1:09pm

The UK jobs market has developed an hourglass figure. Low pay, coupled with benefit cuts, a lack of affordable housing and the soaring cost of living, has created a hollowed out middle, with wage rises for the few at the top and an ever increasing number of low paid workers at the bottom.

Last week, Business Secretary Vince Cable announced that the Low Pay Commission - an independent body that advises the government on the minimum wage - had recommended an increase of three per cent. The rise, yet to be accepted by the coalition, would apply from October, taking the adult rate from £6.50 to £6.70 an hour.

But is 20p really going to change the situation? It was only last September that Chancellor George Osborne revealed the minimum wage would have been £7 by now had it kept up with inflation. And even then it falls well short of the £7.85 an hour (£9.15 in London) advised by the Living Wage Foundation as the very minimum needed to keep body and soul together in 2015.

According to TUC analysis of figures from the House of Commons Library, in some parts of England, under half of all jobs pay workers a living wage. Worse still, in the North, not a single area makes the centre's list of the top ten places for fair pay. For working women, many who are overqualified young graduates, who predominate in the essential cleaning, retail, hospitality and social care jobs that constitute the lowest paid, the statistics are even gloomier.

In Birmingham Northfield, Manchester Heywood, South Blackpool and East Yorkshire, less than half of women earn enough to cover the most basic of living costs. At Loughborough University, researchers have found that 71 per cent of single parent households are surviving off inadequate incomes, while the Social Mobility and Child Poverty Commission reports that, as a result, 600,000 more children are living in absolute poverty today than there were five years ago. Unless immediate action is taken, a study by the Fabian Society projects that growing inequality will push another 1.2 million children into poverty between now and 2030.

It's easy to get bogged down in numbers, but the simple fact remains that rising poverty is not and should not be a given. The hands of politicians are not bound by some unstoppable, malefic force that determines how many people will have to choose between heating themselves or feeding themselves this evening. On the contrary, it is political will that decides how much poverty there is today and in 2030, and the search for an alternative must begin at once.

Until then, the effects will be felt by all. Spending on in-work benefits and tax credits - picked up by the tax payer - increases. Income tax revenues slide as too many of the jobs created are low paid. In fact, when you consider that paying a living wage could save the government £2.2bn in reduced benefits and extra taxes each year, implementing the higher rate sounds less like revolution and more like common sense.

There have been some signs of progress. After a petition for all Premier League staff to be paid a living wage was signed by over 62,000 people, the group promised to speak to it's clubs. So far, however, only Chelsea have signed up. Asked whether it made him uncomfortable to see top clubs paying some players in a week what other members of staff would take ten years to earn, the Premier League's multi-millionaire Chief Executive Richard Scudamore replied: "No, it doesn't." (It is worth pointing out that a new £5.1bn TV rights deal was announced by the Premier League only last month.)

With the Conservatives promising a further £50bn of public spending cuts and Labour's pledge of £8 an hour by 2020 effectively consigning another generation to in-work poverty, it is clear that a compulsory living wage is needed. Squeezed, micro-managed and under pressure from welfare cuts, no one works more strenuously than the lowest paid. Many, particularly in former industrial cities such as Sheffield, Leeds, Newcastle and Manchester, are overqualified young graduates, failing to find work that make the most of their qualifications. Cleaning, retail, security and social care, these are vital jobs. Our national minimum wage should be enough to keep their workers out of poverty.


Text Matthew Whitehouse
Photography Doug88888

matthew whitehouse