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Yes to the living wage: but it’s still too low

Bully for the Milibands. The national minimum wage was never meant to be as low as it is – in today’s economic conditions £6.19 an hour for people 21 and over and £4.98 for those 18-20. The original intention of Rodney Bickerstaffe, the former general secretary of Unison and main architect of its introduction in 1998, was that it should be fixed at half of the male median wage and then progressively raised to two-thirds.

It didn’t happen. Blair appointed a Low Pay Commission headed by a CBI big-wig in order to ensure it started at far too low a level, £3.60, and it has never been increased at a rate slightly above the rise in average wages, as was intended, so that it would grow slowly but steadily towards the two-thirds target. Even Boris Johnson, as well as several big business names, now think it should be hiked to a significantly higher level. But by what criterion?

The Living Wage concept now accepted by many businesses in London puts it at £8.30 an hour, though only £7.20 outside London. This still falls well short of the two-thirds goal. The full-time male median wage today is £538 a week, or £13.24 an hour, so two-thirds of that is £8.82. That surely should be the level of the new Living Wage since it is firmly grounded by the (moving) link with the male median wage. But that still leaves several other issues.

It needs to be agreed that the new Living Wage will be uprated at 1% above the annual rise in average wages, to maintain the momentum away from an unduly low poverty wage line at the bottom. It needs to be enforced by statute, not simply relying on employers being encouraged to do the right thing.

And whilst a steadily rising Living Wage would be an excellent start in the battle against the intolerable abyss between rich and poor in present-day Britain, it doesn’t take that campaign very far when the gap between the top in corporate Britain and the average wage below, which 40 years ago was 20:1, has now soared to no less than 200:1. That requires a far bigger upheaval in the system for allocating incomes across the spectrum from boardroon to cleaners on the shop-floor.

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