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"Minimum Wage"

The introduction of a so-called minimum wage in Britain by Blair’s New Labour (NuLab) has proved a not altogether unexpected disappointment. Since April 1st, workers aged 22 and over have been entitled to £3.60 ($5.9 approx.) an hour. There is a lower minimum of £3.20 for those on training programmes and a lower one still, of £3, for those aged between 18 and 21. The last figures available (Spring ’98) indicated that around 1.9 million employees earned less than the minimum wage rate. So, its arrival was good news — or so you might think. But let’s look at the situation a little more closely.

You could work shifts in a “customer facing role” and watch other people enjoy themselves while you pull pints in a smoky bar. If aged between 18 and 21 you could walk away with £111 (before tax) for a 37-hour week. Of course, attaining the age of 22 should bring an extra 60p an hour. I say should, as a number of pub chains have decided to use the ‘development rate’ as a means of paying a lower rate for six months to new staff undergoing training. Allied Domecq for example pay a starter rate of £3.20 an hour.

There is also evidence that some employers have responded to the minimum wage legislation by introducing lower rates for workers under 22, where they previously did not make such a distinction. Should workers who do the same job be paid a lower rate simply on account of their age? Is £3.60 an hour a just wage, in our affluent society? Should companies be able to use “training” as an excuse for paying an even lower rate?

Look at the pay at the other end of the scale — footballers like David Beckham (£1.3 million, on top of which comes lots more income from advertising) or Marcel Desailly (1.7 million) or the likes of Sir Dominic Cadbury (£1 million plus). Get a calculator and work out their hourly rate! In Britain there has been a widening inequality in earnings. Believe it or not the national average is £400 a week![1] But how many people do you know who are regularly earning that? The “average” figure is distorted by the very high earnings at the top.

The gap in earnings is still not narrowing; in fact, it is widening. Since 1979 the earnings of the top tenth of the population has risen twice as fast as the bottom tenth. By 2010 the top tenth will be earning more than four times as much as the bottom tenth if such trends continue. [2] Between 1979 and 1994/5 the total share of the richest tenth increased from 21 per cent of total income to 27 per cent, while the share of the poorest tenth fell from 4 per cent to only 2.2 per cent. [3]

The public has become painfully aware of how the fatcats operate. Even when the company is doing badly, when workers are being laid-off or having their wages and conditions cut, these already-rich people will pay themselves more. They seem to have no shame.

It is a sad reflection on our society that State action seems the only way to establish economic justice; but it is clear we cannot rely on individual morality to do so. Abuse after abuse has surely taught us that.

In an editorial in issue 30 of Third Way magazine I argued that to tackle inequality we should introduce a higher top rate of income tax on incomes above £50,000, and introduce a minimum wage set at a reasonable level. Since then I have received e-mail asking me what I consider to be a reasonable level for the minimum wage…. I believe that half the full-time average would be a decent starting figure (ie. around £10,000 a year). This, combined with tax changes and the encouragement of co-operatives and trusts for workers, would start to address the inequity in our society.

I also believe that there should be one rate regardless of age. It is simply unfair to pay workers different rates of pay when they are doing the same job on account of their age. The Low Pay Commission are reviewing this point, and have been asked to report to the Prime Minister and the Trade and Industry Secretary by December 1999. Let’s hope they make the right recommendations.

Training should be monitored very closely to ensure that it is not used as an excuse by companies to pay less. The State should monitor the duration and content of all courses, and have powers to force delinquent companies to amend their practices.

Third Way has well-developed policies to reduce the inequities in our society. We do not court and flatter greed. The creation of a harmonious and truly inclusive society will benefit all social classes. Those earning more should consider the difference between standard of living and quality of life. Quality of life concerns not only money but the culture and environment we live in. Issues such as the minimum wage are not mere political issues (in today’s degraded sense of that term), they are ethical issues — and If you stand against redressing such injustice, you are not just wrong, you’ve actually aligned yourself with the bad guys.

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[1] Incomes Data Service
[2] New Earnings Survey, 1997 (and earlier years), Government Statistical Service, HMSO, London 1997
[3] Households below average income: a statistical analysis, 1979-1993/4, Government Statistical Service, HMSO, London 1997

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