If ever there was a cause whose time has come, it must be the living wage. Ed Miliband has pledged to make it a condition of government contracts if Labour wins the next election, while Boris Johnson has called on David Cameron to pay it to all Whitehall employees as of now. Even the Renewal Group launched last year to broaden the appeal of the Conservative Party has made it a centrepiece of its manifesto.
With so many actors from across the political spectrum backing the living wage, why are five million people in Britain – a full 20 per cent of the workforce – now trapped in jobs that pay less than they need to live on? And why is the problem getting worse today, not better?
The principle of ‘a fair day’s work for a fair day’s pay’ has long been a cornerstone of the fight for social justice. The Fabian Society led the charge by calling for a living wage back in the 19th century, while the Independent Labour Party promoted it in parliament via a living wage bill in 1931. Despite the support of 124 Labour MPs, the bill was defeated – but the principle survived into the 21st century and now tops the political agenda once again.
The concept of a living wage represents a significant development over the minimum wage in that it is calculated according to the concrete needs of the worker and their family, not according to hypothetical statements of what the labour market might accept. The UK rate is currently set at £7.65 an hour nationally and at £8.80 for London, in comparison with the national minimum wage of a meagre £6.31 an hour (less if you’re under 21). As well as saving poorer families from sliding into the spiral of debt, the living wage has also been shown to offer net gains to local and national economies by stimulating expenditure and reducing the cost of benefits. Just as the introduction of a statutory minimum wage in 1999 confounded the scaremongers who said it would lead to massive job losses, the living wage is a genuine win-win.
The problem is that up to now the living wage has remained a purely voluntary initiative – an optional extra over and above the minimum wage, and one that employers can therefore adopt or ignore as they please. As confirmed by the Living Wage Commission in its report published this February, the result of this voluntary approach is that in the last year alone an additional 400,000 people have been added to the ranks of those being paid less than a living wage. While voluntary initiatives have succeeded in getting the issue onto the political agenda, now is the time to take the campaign to the next level if the benefits of the living wage are to be made available to all.
This is why War on Want and many other commentators are now calling for the living wage to be made a reality for all working people. We believe that the national minimum wage must be recalculated so that it is enough to live on – that is, elevated to being a truly living wage. We have made this point to the Living Wage Commission in advance of its final report to be published this June, and we will make the same argument to the political parties in the run-up to next year’s general election. As long as the living wage remains voluntary, it will fail to reach the places where it is most needed – most notably, sectors such as retail and care work where low paid jobs are the norm.
The same problem exists in the overseas supply chains that produce the goods we buy in British stores. All companies that are members of the Ethical Trading Initiative have committed themselves to paying a living wage to the workers in their global supply chains. Yet because it is a voluntary initiative, not one of the companies actually honours this commitment in practice. As a result, millions of people around the world are condemned to working endless hours for poverty wages, while British companies continue to profit from outsourcing production to countries with lower labour costs.
There is strong public support for moving to a mandatory living wage. Polling carried out by Labour List last February for the Unions21 Fair Work Commission showed 60 per cent of people in favour of raising the minimum to a living wage. Moreover, that support came from across the political spectrum. Broken down according to how they voted in the last general election, 71 per cent of Labour voters backed the move, with 66 per cent of Lib Dem and 44 per cent of Tory voters also in favour.
We need politicians to make the living wage a requirement on public and private employers, not an optional extra. Leaving it up to voluntary schemes will never end the scandal of poverty pay. Government action is urgently needed, and the public support it. What are we waiting for?
John Hilary is executive director of War on Want