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Labour must defend the minimum wage

As the economy continues to stagnate, with the Tory-Liberal government actively pursuing anti-growth policies which have driven out any hint of recovery , government fixation with austerity now threatens the consensus around the minimum wage as the government plans to use it a scapegoat to blame for the their failed economic policies. A few weeks ago, the Telegraph reported that the government is considering ‘freezing or cutting the minimum wage’ if the minimum wage ‘starts to cost jobs’. Despite the minimum wage increasing average spending power, which in turn stimulates economic activity and provides the cash-flow needed to maintain employment levels, as well as increase tax revenue, the ideological attack on the minimum wage comes as the latest assault on the living standards of ordinary people with the aim of increasing the power of businesses over workers.

Today the government has announced below inflation rises to the minimum wage, raising the average rate by 5p an hour for 18-to-20 year olds, and a meager 3p per hour for apprentices. While technically a 1.9% rise, this increase is so small that it amounts in effect to a minimum wage freeze or a decrease for many, in a climate where inflation is at 2.8%, the average monthly rent is £700 and under-25s continue to be denied housing benefit.

On top of this, the government continues to fail to tackle widespread cases of non-compliance with minimum wage regulation by businesses. According to the Low Pay Commission’s own statistics, in Britain there are 146,000 to 219,000 workers currently not being paid the minimum wage who are entitled to it, although they estimate the figure could be much higher. Since the introduction of the minimum wage, only 2 companies have ever been prosecuted for non-compliance with the minimum wage, around 0.13% of complaints of non-compliance. Labour must take some of the blame for cutting the resources of the Inland Revenue Enforcement Team while in government, but under the Coalition this has only been exacerbated.

Frances O’Grady of the TUC has led the charge today in asserting that the government increases are not enough and should have been much larger: “Boosting the incomes of the low paid goes straight into the economy and wage-led growth must be part of the recovery… we will continue to urge the many employers who can afford it to implement a full living wage for their staff.”

Labour must support O’Grady and make clear that the protection of the minimum wage, working towards total implementation of a living wage, is a key priority of a Labour government. The Tories say that they are ‘making work pay’, but Labour should expose this lie and carve out an alternative economic narrative with higher wages and growth at its core.

This article first appeared in Next Generation Labour.

One Comment

  1. treborc says:

    Defend something which was called the minwage for a reason, it was the min amount you could live on, no I cannot defend it not anymore it’s way to low.

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