From the TUC

NMW increase welcome – but not to be confused with a living wage

01 Apr 2016, by in Working Life

I have been feeling a little conflicted about the new “national living wage” introduced today. On the one hand, it would clearly be churlish to do anything except welcome an increase in the national minimum wage to £7.20, as it will benefit about  1.5 million workers. We have quite rightly campaigned for a bigger increase in the national minimum wage, and now we are getting one.

On the other hand, although the new minimum wage rate is some cause for celebration, our joy can not reign unbounded, as the government’s initiative comes ringed with some caveats, threats and omissions, the biggest of which is leaving 21-24 year olds out of the increase.  Of course, we are also worried about the tax credit and benefit cuts that are coming down the road. There won’t be very much celebration if the government gives with one hand and takes away with the other.

Perhaps the biggest nagging worry is that the “national living wage” looks a bit too much like a quick fix. It’s a welcome boost for some low paid workers but it certainly does not look like part of an integrated pay policy, which would have to address the “squeezed middle” as well as those at the top.

Other aspects of government policy seem directly opposed to the “all in it together/Conservatives are the workers’ party” rhetoric, such as the 1% pay cap in the public sector and the pernicious Trade Union Bill, which would make it harder for unions to win decent pay rises  for their members.

It was also rather cheeky for the Chancellor to use the term “living wage” in this context, especially as the government had previously said that they admired the work done by the Living Wage Foundation, which has been accrediting the well- established  Living Wage for some years now. This  voluntary standard has been adopted by 2,237 employers, including about 1/4 of the FTSE 100 companies. The current rates are £9.40 in London and £8.25 in the rest of the UK.

Government should actively promote this higher Living Wage rate and work towards ensuring that public sector employees and contractors are paid this rate. This approach would complement the statutory minimum wage floor by extending the well-respected Living Wage standard to form a voluntary “mezzanine floor” for unions to negotiate and good employers to adopt.

TUC General Secretary Frances O’Grady says that today’s minimum wage increase is “good news for those aged 25 and older” but “employers can do more for low paid workers, and we urge them to adopt the voluntary Living Wage standard”.

One Response to NMW increase welcome – but not to be confused with a living wage

  1. The National Living Wage: a defence
    Apr 20th 2016, 12:05 pm

    […] to the “squeezed middle” and no protection against pay compression; as Paul Sellers writes here this cannot be mistaken for an integrated pay […]