Link to this page: https://www.socialistparty.org.uk/issue/216/9150
We need a decent minimum wage
THE GOVERNMENT has accepted the Low Pay Commission's (LPC) recommendation to increase the national minimum wage (NMW) for adults from £3.70 per hour to £4.10 from this October.
But, they again rejected the LPC's recommendation that the adult rate should be paid to 21-year-olds.
The minimum rate for young people between 18 and their 22nd birthday will increase by 30p per hour from £3.20 to £3.50 by October and a further 10p per hour by October 2002.
The Low Pay Commission, mainly employers and academics, thought that giving the adult rate to 21-year-olds was the least the government could do to increase the very low numbers of young people voting in the election.
Some of the establishment picked up on this warning and advised at least introducing the adult rate of the minimum wage for young people.
But even this miserable concession was too much for pro-business New Labour.
Industry secretary Patricia Hewitt said that paying 21-year-olds "would increase employers' costs by 28%".
The LPC calculated that the total cost to the economy of applying the minimum wage to young people was only 0.01%.
The minimum wage rate is set so low, it has little effect on either the working poor's living standards or the profits of big business.
New Labour hopes this pitiful rise gives it some approval from its supporters. At all this year's union conferences government ministers and union leaders trumpeted about this "advance for working people."
In fact, since its inception in April 1999 the minimum wage has had far less effect than Labour claims.
In 1998, the government said that the minimum wage would raise the wages of 2.2 million workers. But a report from public sector union UNISON says the real figure was only one million.
"Setting the rate at £3.70 in April 98 but only applying it 12 months later was the equivalent of setting it at £3.40 in April 1999...
The normal rise in wages had already seen a decline in the real value of the NMW by then".
The union's report also shows that "non-compliance is now rife" from eliminating tea breaks without reducing the hours spent at the workplace to cancelling allowances and other fiddles by the employers.
The number of enforcement orders doubled to 171 in the nine months up to January 2001. The report estimates that at least 300,000 people are at present being unlawfully paid below the minimum wage.
It calls for a dedicated government agency to enforce the minimum wage rather than the Inland Revenue department.
TWO YEARS of the NMW has changed little on the shop floor. In non-unionised workplaces the boss can still get away with paying slave wages. Even in unionised workplaces, the UNISON report shows there's still a long way to go. Tens of thousands of term-time workers and student nurses are exempt from any minimum wage laws.
In any case the low minimum wage hardly has any effect even if very rigorous enforcement takes place.
The family budget unit estimates that workers need at least £5.50 to £6.96 per hour to bring up their families.
21% of private sector workers are on less than £5.10 per hour, UNISON claimed last year, as part of its campaign for a minimum wage of half male median earnings.
12% of public-sector workers are in the same poverty trap but 42% of part-timers are below this level.
This varies from region to region. In London "only" 12% earn less than £5.10 per hour (37% of part timers) but in North-east England 23% of full timers and 53% of part timers are on less than this.
UNISON estimates that if the minimum age went up to £5 per hour this would benefit four million workers immediately compared to the one million that the present level affects.
Some of the biggest companies have the greatest differentials in earnings between their top and lowest-paid employers.
Compass Granada (with many office cleaning contracts) pays its directors £1 million or more whilst the lowest paid worker gets less than £11,000 a year.
UNISON led the campaign for a "living wage" with a massive demonstration in Newcastle in 1999 (though the leadership opposed this at first - the Campaign for a Fighting Democratic UNISON, led by the Socialist Party, forced it through UNISON conference).
Since then little has been achieved. The government still gets away with its miserably low minimum wage. The unions pass resolutions calling for the minimum to be raised to at least half male median earnings ie about £5 to £5.50 at present.
The European Union estimates workers need a national minimum wage of £7.50 an hour. This decency threshold is the minimum level needed for living decently.
But given the regional differences and therefore different levels of expectations, we should put pressure on the union leaders to seriously campaign for their own targets of £5 to £5.50 an hour.
We should not let them off the hook by just having a figure of £7.50 per hour and leave it at that, but demand that to achieve this the unions should organise a mass campaign to get the £5 level as a step towards the £7.50.
In The Socialist 27 July 2001: