Today’s guest post is from Jax, who blogs at Making It Up and tweets as @liveotherwise. She describes herself as “a home educating mother of four, working from home around the children on wordpress websites for small businesses and spending far too much time blogging, and ranting on twitter about inequality.”
There’s been an awful lot written the last few days about benefit cuts and how it’s the only way to make work pay. On top of that there’s been some suggestion that the government is thinking of cutting the minimum wage. This seems to me bizarre – surely the best way to make work pay is to actually make it pay a decent amount. A fair day’s wage for a fair day’s work or some such. Something like perhaps the living wage?
From Citizens UK:
“The Living Wage is a number. An hourly rate, set independently, every year (by the GLA in London). It is calculated according to cost of living and gives the minimum pay rate required for a worker to provide their family with the essentials of life. In London the current rate is £8.55 per hour. Outside of London the current rate is £7.45 per hour.”
We’re told that in May 2010, David Cameron said the living wage is an idea ‘Whose time has come’. In 2012 Ed Miliband declared that if Labour get back into government, Whitehall contracts will only go to firms paying the living wage. (The government’s response was that this might break EU law. Sigh.)
But surely, in these times of austerity, increasing pay is an awful idea, and firms just can’t manage it?
Well, I found a report from the Resolution Foundation that thinks they very much can. Comments like “many large firms facing an impact on their wage bill as a result of introducing the living wage of less than one per cent” make it clear that firms claiming they’d be bankrupted are just not telling the truth. There are obvious benefits to increasing pay – increased worker loyalty, less churn, which in turn means less training and recruitment costs. More than that though, the benefit to the country in terms of higher NIC and tax payments, along with a lower tax credit bill means that the authors “estimate that the Treasury would achieve gross savings of around £3.6 billion if the living wage was universally applied”.
Now that seems like a stunningly good idea. They are against legislating for the living wage as they feel that universal requirement for it would result in around 160,000 job losses. And it wouldn’t solve all problems – a number of low paid workers, particularly part timers, would still need tax credits to bump their income up to an acceptable level.
But it would make work pay, return self respect to a large number of people currently tarred with the media and government rhetoric as scroungers and simplify the Universal Credit system which says that those on low pay or working low hours will be monitored and encouraged to increase their income or face sanctions. (Actually, I find that slightly horrifying. Will caring for children be an acceptable reason to work part time? Given that those earning under £10,000 aren’t getting the increased assistance with childcare costs, where’s the incentive for them to even attempt to find work? But couples earning up to £300,000 between them are. Bizarre.)
Is Living Wage the answer? I don’t think it’s the only one. But I think it’s a start.