Low Pay Britain


Published earlier this week, the Resolution Foundation’s Low Pay Britain charts the success of the Minimum Wage (now officially called the National Living Wage) in reducing inequality at the bottom of the labour market.

A record two million workers – 7.3 per cent, now depend on the legal minimum wage, covering around 1.6 million jobs. When it was introduced in 1998, the Tories and neo-liberal economists argued that minimum wage legislation would only lead to higher unemployment or shorter hours, but it now enjoys cross party support as a way of limiting the effects of a deregulated labour market, though there’s disagreement over how much it should be. Currently standing at £8.21 an hour for people aged 25 and over,  the Living Wage Foundation charity says the “real living wage” should be £10.55 an hour in London and £9 in the rest of the UK.

Low Pay Britain maps out some possible future developments.  It also cites Labour’s plans for a £10 per hour minimum. The report does have its limitations. It doesn’t concern itself with the quality of or type of jobs that low-paid people do. Because it is concentrating on those at the bottom of the pay league, it doesn’t assess the implications of labour market polarisation and the loss of ‘middle jobs’ for inequality. Most significantly, it  excludes reference to those who are ‘self-employed’ who number about 1 in 7 of the workforces. And needless to say those in the ‘cash in hand’ economy are not considered. Nobody seems to be able to accurately estimate the extent of this.

But increasing the minimum wage in the way that Labour proposes can be part of a more general programme of reforms ( a new ‘Labour State’ that could include a reduction in the working week, some form of universal basic income and restoring ‘collective bargaining’) while also recognising that, as the Institute of Fiscal Studies recently noted, it’s welfare benefits that continue to provide the most important security against economic deprivation.

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