A living wage
November 5, 2012 1 Comment
My memory of the introduction of the national minimum wage is that this was introduced with strident opposition from the Conservative Party, and big business. Claims were made, if my memory serves me right, that if implemented the NMW would see an additional one million made jobless. History shows us that the reverse was true; the NMW came early on in a record-breaking streak of growth in the UK economy – a streak only broken with the collapse of international financial institutions.
Ed and David Miliband this weekend announced their support for a Living Wage – a natural extension to the minimum wage. Whilst the NMW was did much good it clearly is now time for the next step in creating a fairer society. The national minimum wage, as its label clearly infers, is meant to be the low bar for remuneration. Its purpose was to liberate the low-paid from the shameful pittances they were expected to put up with. Wages at 70p an hour were not unheard of in 1997, and thankfully these are a thing of the past.
Now we have an established minimum we must push on. I think it is recognised beyond doubt that the minimum wage has been a boost for the economy, and a living wage would be another fillip. Remember, those on the lower rungs of the financial ladder spend a greater proportion of their incomes, and so helping the poor helps us all.
I accept that some employers will initially baulk at what they will perceive as an additional burden, and work will have to be done to convince them. Some are already on board, paying the Living Wage now, seeing the economic sense of doing this, and seeing the fairness argument too. Paying higher wages, seeing this recycled into the local economy, and seeing the benefits bill shrink too strikes me as a win-win.
Rising income inequality hurts the economy for the same reason as a low minimum wage. If consumer’s wages don’t keep up with productivity growth, the economy will slow. You can’t produce more if no one can afford to buy it!