Link to this page: http://www.socialistparty.org.uk/issue/804/18373
Fight for a £10 an hour minimum wage
Judy Beishon, Socialist Party executive committee
Under the Con-Dem government, households at every income level have had a fall in living standards, declared the Institute for Fiscal Studies (IFS).
This is no surprise to most people, only too aware that wage levels have been stagnant while prices have rocketed upwards - between May 2010 and January 2014, food prices increased by 15%, social housing rent by 15%, energy costs by 35% and public transport by 17%.
Those at the bottom of the income scale have suffered the most, with a 5.1% drop in household living standards, greater than other income levels.
Poverty pay is endemic, an outrage that the trade union movement urgently needs to collectively fight - above all to secure above inflation pay increases that will start to reverse the decline in living standards.
In addition, the movement needs to fight for a minimum wage that people at the bottom end of the pay scale can actually live on.
The legal scandal of people on the minimum wage working 35 hours a week or more, yet not earning enough money to live on, is insupportable - what an indictment of British capitalism that hundreds of thousands of workers are stuck in that trap.
And for the hundreds of thousands more on the minimum wage who are only offered part-time hours, the struggle to survive can be even harder.
As with the wages of most workers in the public sector, the minimum wage has risen by less than inflation since the onset of the economic crisis six years ago, making it even harder to get by on.
The Resolution Foundation calculated that it is now worth £1,010 a year less than in 2008.
The Low Pay Commission argues that the minimum wage has, however, provided some protection for the lowest paid, because it has risen relative to median earnings during that time.
But rather than resulting in a better position for workers on the minimum wage, this is an indication of the 'race to the bottom' being pursued by many bosses across the UK, an overall driving down of wage levels for the majority in society while the rich have become richer.
Recent studies by the Resolution Foundation confirm that many employees start work on the minimum wage and then remain on it for years, as it has become the 'going rate' in some sectors.
The studies also show that a large number of workers earn barely more than minimum wage: About 1.2 million workers are paid the minimum wage or no more than 5p above it, and a further 1.4 million earn no more than 50p an hour more.
Altogether, five million workers are classified as low-paid, earning below £7.71 an hour, which is two-thirds of the median full-time hourly wage - the OECD's definition of low pay.
"The minimum wage is not a living wage: a living wage aims to assess needs and to provide enough for an employee and their dependants to live on, whereas the NMW [national minimum wage] aims to provide a wage floor which is affordable for business", restated the Low Pay Commission in a March 2014 report.
The report goes on to say that the tax and benefits system has to plug the gap so that workers can survive.
But the government's onslaught on benefits and services has wreaked catastrophe; people in work as well as the unemployed and incapacitated are losing their homes, living without heating and resorting to food banks.
The IFS calculated that families are on average £891 worse off this year due to tax and benefit changes imposed since 2010.
What about the raising of the tax threshold, has that helped those on the minimum wage? The Low Pay Commission has pointed out that 56% of workers on the minimum wage have not had an increase in real take-home pay in the 2013-14 financial year, because they don't work enough hours for the tax change to have compensated for inflation (many were not earning enough to pay tax in the first place).
Real 'living wage'
How much should a 'living wage' be? A minimum of £7.65 an hour is the present estimate for a minimum acceptable quality of life (if state benefits are claimed on top) as calculated by a research unit at Loughborough university, and promoted by the Living Wage Foundation.
However, the Resolution Foundation has drawn attention to the fact that £7.65 is a capped, compromise figure, in order to stop the 'living wage' from rising each year much faster than average earnings. Without the capping it would be £9.08 an hour!
Separately, the Greater London Authority estimates that a living wage for London would at present be £8.80 an hour, and pays this as a minimum to its own workforce.
This figure would need to be £11.30 an hour if means-tested benefits are excluded from income (tax credits, housing benefits, council tax benefits).
A number of trade unions campaign for employers to pay a living wage as a bottom line rather than the minimum wage.
There have been important campaigns and struggles of workers for this, with it being won in some cases.
A small minority of councils, just 22 so far, have been accredited by the Living Wage Foundation as paying at least a living wage.
Cleaners in the houses of parliament and on the London underground have won battles for the living wage, as have cleaners and porters at the Royal Opera House.
While defending the existence of the national minimum wage and welcoming every increase, the Socialist Party calls for it to be immediately increased to the level of the living wage, so that it won't be at the whim of individual employers whether or not they abide by it.
The Tory Party opposed the introduction of the minimum wage in 1999 and many Tories and representatives of bosses' organisations like the CBI howl in protest when increases are discussed each year.
In trying to ward off any infringements to their profits, they threaten that if forced to pay a higher minimum wage they will cut the size of their workforce or reduce workers' hours. They also argue that it can fuel inflation and reduce investment.
These are sham arguments when considering that the real value of UK wages has fallen by over 7% since the start of 2008, while the wealth of the top 1% is unprecedented and the top companies are hoarding mountains of cash.
Also, the Low Pay Commission's March 2014 report draws attention to the long-term fall in the share of national income which goes to wages, stating that in the 1960s and 1970s it averaged around 59% but now fluctuates at around 54%.
Oxfam reported on 17 March that the country's five richest families now own more wealth than the poorest 20% of the population, ie 12.6 million people. "Since 2003 the majority of the British public (95%) have seen a 12% real terms drop in their disposable income after housing costs, while the richest 5% of the population have seen their disposable income increase".
More working households are in poverty than non-working ones, was one of Oxfam's findings.
The Low Pay Commission concludes from its many studies that there has been no evidence of "adverse employment effects" in the 14 years since the minimum wage was brought in.
Many proponents of a higher minimum wage point out that it would help to boost the economy by increasing consumer spending; workers spend most of their money on essentials whereas the richest in society hive large amounts away in financial products, savings, property, artworks, etc.
Increased wages also boost the government's tax and national insurance receipts and lower its outgoings on means-tested benefits.
Furthermore, the Living Wage Foundation reported on a study that found that 80% of businesses in London with a policy of paying the living wage believe it had "enhanced the quality of the work of their staff" and absenteeism had fallen by around 25%. Two thirds of employers reported a significant impact on recruitment and retention.
Substantially increasing the minimum wage and the wages of all working class and middle class earners will not solve the capitalist system's fundamental problems.
Its inherent contradictions, as explained by Karl Marx and Friedrich Engels, will remain until a powerful enough workers' movement - with a mass workers' party - takes society into its own hands, removing all capitalist relations and organising society on a democratic socialist basis.
Nor will such increases bring about any lasting improvements for workers; history has proved that any gains have to be fought for time and time again in the battle between the classes in society, for as long as capitalism lasts.
But while recognising these facts and spreading socialist ideas, we fight for all gains that can be made, including for a minimum wage at a higher rate than one allowing only the lowest 'acceptable' standard of living.
There is easily enough wealth in capitalist Britain to provide a minimum wage that could also deliver comforts, security, leisure pursuits and entertainments, as well as much higher wages further up the pay scale to recognise skills and experience.
So while arguing for the immediate introduction of the 'living wage', the Socialist Party also calls for trade union struggle to bring about an increase in the minimum wage beyond that, to £10 an hour.
That figure would need to be reviewed and increased as the cost of living rises - the lowest paid are the least able earners to bear the consequences of inflation.
Any large company that refuses to implement an increased minimum or that threatens to lay off workers should be taken into public ownership so that decent jobs can be guaranteed.
Any small businesses, however, that would genuinely struggle to pay a higher minimum, should be eligible for assistance from public funds.
A higher minimum wage needs to be part of a programme of other measures to help low paid workers, including a major investment in job creation, rent controls and construction of new publicly owned housing - at present the low-paid spend between a third and half of their income on housing.
That raising the minimum wage isn't so disastrous for the Tories' friends in big business is shown by the recent announcement of small planned increases, as George Osborne has tried to 'outflank' Ed Miliband's concern over the cost of living.
Guardian diary editor Hugh Muir commented: "The chancellor's belated conversion to the cause of raising the minimum wage is a breath-holding, teeth-grinding, buttock-clenching, gravity-defying U-turn of massive proportions.
"Osborne, having been cheerleader for his party's view that the minimum wage is a destroyer of jobs and sapper of enterprise, now says he wants the low pay commission to raise the hourly rate from its current level of £6.31 to £7 an hour by next year" (17.1.14).
Miliband warned in a recent article: "The richest 0.1% currently have about 5% of national income - a proportion that on current trends will rise to 14% by 2030".
But his own proposals are effectively just tinkerings that wouldn't significantly counter low pay and inequality.
Neither Labour nor the Tories will increase the minimum wage to £10 an hour without a Seattle-style campaign spreading across the country.
There, Kshama Sawant, the victorious Socialist Alternative candidate was elected to the city council on a platform of calling for a city-wide minimum wage of $15 an hour, a campaign that is escalating.
The reverberation from that struggle is spreading beyond the USA, including to Britain.
- The immediate implementation of the Living Wage as a step towards a minimum wage of £10 an hour, with regular increases to cover price rises
- No exemptions from the full minimum wage for young workers, apprentices and internships
- No deductions from the minimum wage for work-related accommodation costs
- Reverse all cuts in benefits and services and fully fund them
- The first £15,000 of income to be exempt from all tax
- End zero-hour contracts and all forced under-employment
- Investment in a massive programme to create socially useful jobs
- A maximum 35-hour week with no loss of pay
- All workers, including part-timers, temps, casual and migrant workers to have trade union negotiated rates of pay, employment protection, and sickness and holiday rights from day one of employment
- Tax the super-rich! For a socialist government to take into public ownership the top 150 companies and banks that dominate the economy and run them under democratic working-class control and management. Compensation to be paid only on the basis of proven need
Present minimum wage rates
- £6.31 an hour for workers aged 21 and over, increasing to £6.50 in October
- £5.03 an hour for workers aged 18 - 20, increasing to £5.13 in October
- £3.72 for workers under 18, increasing to £3.79 in October
- £2.68 for some categories of 'apprentice', increasing to £2.73 in October
A small minority of councils, just 22 so far (that's less than 5%!), have been accredited by the Living Wage Foundation as paying at least a living wage.
London: In 2007 420,000 people were paid below the London Living Wage. By 2012 this number had increased to 600,000, which represents 17% of all the jobs in London, pointed out London Assembly member Fiona Twycross.
Only two employers in four years have been prosecuted for paying below the national minimum wage despite more than 300,000 people in the UK earning less, a report from the Centre for London and the Trust for London revealed.
Since 2009 HMRC has fined firms £2.1 million that have broken the law on pay but have rarely prosecuted.
Check out the US campaign for a $15 an hour minimum wage: www.15now.org
In The Socialist 26 March 2014:
Socialist Party news and analysis
International socialist news and analysis
Socialist Party youth and students
Socialist Party workplace news
Socialist Party reports and campaigns