Last week the pro-market Institute of Economic Affairs published a report criticising the effect of the national minimum wage on jobs and argued, among other things, for its level to be reduced and for it to be done away with altogether for young workers. The IEA also blamed the national minimum wage for the proliferation of zero-hours contracts. Their basic argument is disarmingly simple; forcing employers to pay higher wages than they want to means they employ fewer people and what people they do employ are put on dodgy contracts. You see, it is not the employers’ fault. Do not blame them. It is the fault of that nasty minimum wage.
What drivel. It beggars belief that anyone could seriously twist reality in this way.
One of the strengths of the Low Pay Commission’s approach to setting the National Minimum Wage is that it is founded on rigorous evidence and careful research into the national minimum wage’s effect. The commission’s essential function is to raise the national minimum wage while avoiding an unacceptable adverse effect on jobs. As their annual report makes very clear in great detail, the rates set for over-20s, 18-20-year-olds, under-18s and apprentices have been monitored and tested so we can be sure; there is no evidence that these national minimum wage rates have had any meaningful detrimental effect. Unlike the unashamedly biased Institute of Economic Affairs, the Low Pay Commissioners act as independent experts advising government, who draw their conclusions from hard facts.
Yet, ignoring the evidence and relying on pure prejudice, the IEA seeks to make excuses for the cheapskate employers, pass the buck for the disgraceful abuses associated with zero-hours contracts and condemn young workers to unbelievable poverty and exploitation. How on earth can anyone seriously suggest that the apprentice rate of £2.68, barely more than a gesture as it is, should be removed altogether? The net result of all these IEA proposals would be to further subsidise bad employers from the public purse by forcing more in-work benefit dependency. This would be the complete antithesis of the purpose of the national minimum wage, to give people dignity through work that pays fairly. That is why Labour and trade unions fought for it and introduced it fifteen years ago. That is why we must continue to fight for it and to build on it. The national minimum wage is a powerful tool for social justice, so it will always be anathema to those who want to maintain division and inequality by exploiting workers. For those who believe in that good old adage of ‘a fair day’s pay for a fair day’s work’, the challenge will be how to make a living wage out of the national minimum wage.
Some have called for the national minimum wage to be raised to £7 an hour. Presumably the real game here is that the IEA are trying to launch a pre-emptive strike against that and no doubt other right wing so-called think tanks will join in. They will try to create an illusion of a body of evidence for an unsubstantiated argument that a higher national minimum wage will be seriously damaging for jobs and the economy. Unfortunately for their creed, there is a devastating killer argument against them. The German cabinet, always ultra-cautious to avoid anything at all that might conceivably damage their economic and business interests, has just approved their first national minimum wage … of £7.04.
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Brian Strutton is national secretary of the GMB
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Tomorrow marks the end of Fair Pay Fortnight
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Photo: Todd Stadler