Wealth gap widens The Low Pay Scandal Exposed

Special Feature

Wealth gap widens The Low Pay Scandal Exposed

NEW LABOUR came to power in 1997 promising to introduce a minimum wage. They claimed it would eradicate child poverty within 20 years. But low pay is still the major issue for thousands of workers. Ken Smith looks at the reality behind the promises.

IN THE last few years, protests against poverty pay have greatly increased. Within the last month, local authority workers and postal workers have been on strike against low pay. Earlier this year, firefighters took action against the continued erosion of their pay levels which is driving them into poverty.

In the NHS, low-paid ancillary staff have been protesting all over the country against their measly pay. In some cases, such as at Whipps Cross hospital, north-east London, where Socialist Party members played an important role in the struggle, workers have won wage increases.

The minimum wage was increased on 1 October 2003 to £4.50 for those workers aged 22 and over. Workers aged 18-21 get the so-called development rate of £3.80 an hour. Those under 18 do not get a minimum wage.

Despite the introduction of the minimum wage and tax credits, many struggle with low pay everyday. Throughout the public sector millions still endure poverty wages. And in retail and catering, poverty pay is on an overwhelming scale.

Add to that the millions of students who are forced into low-paid jobs because of tuition fees and student loans and you have an epidemic of hardship.

And despite Labour’s promises, the wealth gap in Britain is widening and the number of people defined as living in poverty is not decreasing. Incredibly, an estimated 170,000 workers are being paid below the minimum wage, four years after its introduction.

For the unions to take immediate action to implement their current minimum wage demands, as a step towards a legal minimum of £8 an hour. No exemptions.

For an annual increase in the minimum wage, linked to average earnings. For a minimum income of £320 a week.

How much should the minimum wage be?

THE LOW Pay Unit no longer uses the European Decency threshold to define the wage which would take a person or family above the poverty level. Originally, the Council of Europe’s Social Charter defined the decency threshold as 68% of average earnings within a national economy.

However, some of the articles of the Social Charter have been altered and a committee of experts has redefined the decency threshold; they now say it should only be 60% of net earnings because the original definition was set under a ‘male breadwinner’ framework. Although they say this is because more women are in work, it ignores the reality that women workers across Europe (and in Britain) earn a lot less on average than male workers.

The redefinition of the threshold means that workers in Britain would be told they only need to earn £5.33 an hour to be above the decency threshold, as opposed to £7.55 under the old definition.

Instead, the Low Pay Unit (LPU) stick to a formula closer to the original used for the European Decency Threshold – two-thirds of male median earnings (the median is the point at which half earn above and half earn below).

Currently in Britain that formula would mean a figure of £7.41 an hour or £280 a week for 38 hours (the average hours worked by all full-time workers, excluding overtime).

The LPU says that the minimum wage should be set at half male median earning or £5.55 an hour – this is about the same level as most of the major trade unions. The TUC’s target figure is for £5 – £5.30 per hour by 2004.

The Socialist Party believes that the unions should take immediate action to implement their current minimum wage demands. But we argue this should be only a first step in mobilising a campaign to achieve a legal minimum of £8 an hour – ensuring a minimum weekly income of at least £320. The LPU’s £7.41 was calculated last year and should account for inflation and other tax increases that have been introduced since.

We also argue that there should be an annual increase linked to average earnings and that there should be no exemptions for under-21s or under16s.

All workers should have equal pay for work of equal value from day one of their employment, whatever their age. All workers should also have full employment rights from day one of starting their job.

Low pay, poverty and wealth – some facts

IN 2000, the weekly income that defined the poverty line (income below 60% of the median – the official definition of poverty) was £103 for a single adult, £170 for a couple with no children and £281 for a couple with children.

In 2001, 11.7 million individuals (including four million children) lived on income below those figures – an increase of 700,000 in five years.

3.5 million people – 30% of those living in poverty – live in households with at least one wage earner. The working poor represent a larger group than the unemployed poor or the pensioner poor.

2.5 million workers in Britain earned below £72 a week in 2000 – 80% of these were women.

In hotels and restaurants 75% of workers earn less than £6 an hour. In retail it is 55%. Workers who are non-unionised are more at risk of low pay.

1.7 million-2.2 million people in London are defined as living in or on the margins of poverty, according to the London Research Centre.

The wealthiest 1% of individuals own between a fifth and a quarter of total household wealth in the UK. Half the population share only 6% of the total.

The salaries of top executives have increased by over 15% a year every year since Labour came to power. Income Data Services reports that pay rises for executives in the top FTSE-100 companies were running at 23% in the first quarter of 2003.

Students learn the hard way

WITH INCREASING attacks on higher education, more and more students have to study for a full-time degree whilst working.

Sheila Caffrey, Socialist Students, Swansea University

Students no longer work to gain ‘valuable work experience’ or ‘bolster their CV.’ So they are wide open to low wages, bad conditions and exploitation.

Many students are under 22 and come into the lower bracket of the minimum wage. This £3.90 an hour means they have to work longer and longer hours. Students are also frequently badly informed about their rights, are often heavily taxed and don’t receive benefits like holiday or sickness pay.

After my first term at university I had already over a grand’s worth of debt. So, to keep my debt under the average £16,000 after three years, I was off to work.

I found work almost straight away in a local take-away. The perks of this prestigious job were to choose my hours, be paid weekly and receive ‘cash in hand’ – paying no tax or national insurance.

As was suggested, I worked all day for the first three days to ‘learn the ropes’ but after receiving my pay of £2.50 an hour I left fairly sharply with mutterings about legalities, the minimum wage and trade unions.

Next, I advanced my career as a waitress in a highly paid job at £4.50 an hour – a full 80 pence higher than the minimum wage. The amount of tips I collected was amazing but I was told these were kept to cover “loss and breakages”.

I later discovered that in fact the tips were divided amongst the full-time workers, but as I only worked about 24 hours a week I didn’t rake in enough profit to be worth this bonus!

My tale of woe is only one amongst thousands. Many face much worse – there is a growing number of female students having to find work in the sex industry.

With the abolition of all tuition fees we need to demand the reinstatement of a living grant for all students as well as an increase in the minimum wage to £8 an hour for all.

Time to join the union

This summer I joined the Communication Workers’ Union (CWU). I only have a temporary part-time job to help pay for study but I think this was all the more reason to join the union.

Matthew Dobson Wales ISR

The majority of young people are in low-paid, casual work in one form or another. It is obvious that employers target young people who have no choice but to take low wage employment – they need to be aware of their rights and how they can be represented in the workplace.

Without the protection of an organised union branch in the workplace young workers will be exploited and suffer victimisation and discrimination. This happens in places like call centres and fast-food restaurants where unions either do not exist or do not try to appeal to young people. Unfortunately in many workplaces the union is just a poster on the wall.

The only way this will change is if the radical youth from the anti-war movement, especially those involved in International Socialist Resistance, pour into the trade unions and become active members. It may seem like a daunting task to express your ideas amongst experienced trade unionists but the only way the unions have a future is through us young workers.

Older trade unionists have valuable experience that if relayed to youth will strengthen the union and give ammunition to future struggle. We should aim in our workplaces to encourage all workers, especially young workers, to get unionised and fight against discrimination, low pay and bullying bosses.

Fighting For The Low-Paid

An interview with Maureen Madden, candidate for general secretary of USDAW, the shopworkers’ union.

USDAW IS one of the last big unions to hold an election for a new general secretary. The union mainly organises amongst low-paid retail workers – about 60% of the membership are women.

The Left’s challenge is mounted by Maureen Madden, a former presidential candidate and former executive member from the North-East. The incumbent, right-winger Bill Connors is retiring, and from now until 5 December a bitterly fought battle for his job is likely.

End partnership

Maureen is campaigning for democratisation of this right-wing union and an end to the partnership deals with the bosses. She will proudly take her place in the so-called ‘awkward squad’ of trade union leaders if elected. She has 30 years experience working on the shopfloor as an “ordinary member who knows what it’s like to juggle, work, family and union commitments.”

Maureen says she will be “a fighting campaigner for ordinary members’ rights, who is not afraid to challenge the establishment and employers… who treat their staff in a miserly way.”

Her determined stand has already attracted the attention of the right-wing officials. The right-wing leaders have done partnership deals with bosses of companies like Tesco for years, which has benefited the company and the union leaders – guaranteeing income from membership fees – but has done nothing to benefit the union members. Maureen explains why:

“I don’t agree with partnership deals. In the deal with Tesco, we see it is profitable for the bosses and union leaders but not the members.

“Our membership in Tesco has gone up from about 80,000 to 100,000 but it hasn’t brought real benefits in terms of our members’ pay and conditions.

“Every member of the union, where we have negotiating rights, should be entitled to vote on their pay and conditions. Tesco recently awarded staff a 2.9% pay increase and gave their directors a massive 12.9% increase. We should be challenging these bosses.”

“The union has to be made fairer and democratic, more open. I believe we have to build the union from the bottom up to give it a higher profile.

“USDAW needs to be more confident in flexing its muscles and in its ability to get improvements for our members.

“We should have a one-off flat rate for union subs for students and young workers of 50p a week to get them in the union and then we can keep them in the union.

“We should demand a minimum wage for under-18s and at the same time oppose it being at a different rate for those under-21.

“I also think the union should oppose starter rates. In Tesco and Co-op, for example, you can start in the retail sector at age 21 but still be on a starter rate which is £1 less than somebody else of the same age.”


Maureen explained how her campaign was standing up to a right-wing campaign that was trying to undermine her and marginalise her:

“The campaign has been going well, although it is a bit unpredictable, given the way the right control the union with an iron grip.

“I have had some nominations from branches in Kent and the North-East, which I didn’t expect to get. But the whole procedure is very undemocratic and flawed. A lot of branches don’t meet properly, only about half of the 700-plus branches actually meet and 200 of these are controlled or ‘looked after’ by full-time officials.

“USDAW has a huge number of women members and while we have had an influx of women on the executive we still don’t do enough for women in the workplace. We should be fighting for equal work of equal value and need more flexible hours and family friendly policies.

“I will certainly be part of the awkward squad and I hope that there can be even more co-ordination among the new union general secretaries. We have to get away from the old-style image of trade unionism that many members have got from the old leaders. We need to be more available for workers.

“I believe there should be shops in every city and town centre, run by the unions, where people can get advice and be told which union would be best for them to join.

“I think we may need fewer unions now, but we need to ensure we work together more across a range of issues, not just one-off campaigns.

“Although I would be the first woman to be elected general secretary of a major union, I think at the end of the day it’s about your politics. Although I do believe if I am elected it will give women in the unions more confidence that they can break through the glass ceiling.”

Finally, Maureen outlined where the union would stand in relation to the Labour Party if she were elected:

“I think political decisions by our union should be taken for our members’ interests, not those of political parties. USDAW gave New Labour £1 million in 1997 and that has been a tremendous disappointment. Obviously, I don’t want the Tories back in but I don’t want a Labour Party that mimics the Tories.

“I disagree with policies like PFI and foundation hospitals and I don’t believe the union should be funding the Labour Party until it starts working for us.

“In the past, USDAW leaders have been bought off by Labour governments with honours and patronage. I wouldn’t accept that or be like that. I will argue that we should think very carefully before giving any more money to the Labour Party nationally.”

Socialist Students Show The Way

Socialist Students had the liveliest contingent on the National Union of Students demonstration against fees on Sunday 26 October. Over 50 Socialist Students members and supporters came to the national meeting on ‘How to beat fees’ after the demo.

Zena Awad

This shows that an increasing number of students are interested in the socialist alternative to tuition/top-up fees, to student debt and poverty.

Sheila Caffrey from Swansea Socialist Students spoke on the need to build a campaign of mass non-payment to make fees uncollectable and therefore unworkable. It was pointed out that many students don’t pay their fees already because they cannot afford to and they need to be organised in a mass campaign.

We need to find out how many of these non-payers there are on the campuses and to help build a campaign to defend them from expulsion. The local students’ unions must be pressured to support these campaigns – through emergency motions if necessary.

Socialist Students’ members need to find out the deadline for submitting resolutions to their local student union AGMs to back these campaigns and to also to put forward motions for NUS conference to back this on a national level. Students were angry over how little the NUS has done, considering the potential for building this campaign.

Clare James spoke from International Socialist Resistance (ISR) about the reality facing tens of thousands of students being forced into low paid casual work and raised the question of the unionisation of young workers. She also called for further discussions on how those starting higher education after 2006 can get organised against the graduation tax which will hit them in the aftermath of graduating, rather than while on campuses.

Clare called for the building of the campaign to defend the right of students to strike and to do so through defending those already facing possible charges, like Karl Debbaut who took part in helping school students walking out against the war on Iraq on Day X (see page three)

The meeting agreed that, with Socialist Students being affiliated to ISR, we will be sending a good delegation to the national conference on the 22 November, where there is a workshop on how to build Socialist Students and our future campaigns. This follows George Bush’s visit to Britain from 19 – 21 November where both Socialist Students and ISR will be planning joint activities (more on this in future issues).