Monday 14 May 2012

Moving The Goalposts Again…

Matthew Pennycook in CiF:
Last week, 64 low-paid cleaners working at the Department for Work and Pensions and the Foreign Office left a letter on the desk of the work and pensions secretary, Iain Duncan Smith. They asked only that they be paid a living wage.
A what?
The incident is testament to the fact that for the six million workers in Britain currently earning below a living wage (£8.30 in London and £7.20 elsewhere), pay is not doing enough to guarantee an adequate standard of living.
But wait, you cry! What about the minimum wage? I thought that was supposed to cure all ills?

Suddenly, it’s not good enough?
Over the past decade, the social consequences of Britain's endemic levels of low-wage work have been masked to a large extent by the lifeline which tax credits have offered to low- to middle-income households.
Ah, indeed. The ridiculous idea that we should take money off people merely to then turn around and hand it back to them is an utter nonsense that has rightly imploded.
Without them, many struggling families would have seen their living standards tumble sharply. Yet few, if any, believe that the growth in tax credit support that occurred over the past decade can be repeated.
That’s because the money’s run out.
Yet despite some high-profile successes, the number of accredited living wage employers remains small.
So who are they?
Those that invest in their employees are confined largely to high-profile financial and legal firms...
… and public sector bodies.
So….the organisations jumping on board this bandwagon are the ones that:

A) generally come in for all the criticism from the left for making huge profits, and
B) those that don’t have to worry about making a profit because the taxpayer’s tap is permanently switched to ‘on’?

A living wage is not about obliging employers to pay higher wages through legislation, that is what the minimum wage is for.
And oh, how quickly those goalposts moved once you’d achieved it, eh?
But even in today's economy, there are opportunities for leadership. The apparent affordability of a living wage in key sectors presents a challenge to large companies: be clear about why you cannot pay a living wage or take concrete steps to do so and thereby ensure that the wages you pay are enough to secure an adequate standard of living for your low-paid employees.
Or ignore this campaign and let your competitors go bust trying to do the impossible; appease the left!


Anonymous said...

That's a bit rich coming from The Grauniad who pay their interns the square root of bugger all.

SadButMadLad said...

Ignoring the fact that the minimum wage actually harms the employement of the low paid, you missed one word out. "National" minimum wage. The cleaners in Grimsby are happier about their wage than those in London because it goes futher. Nearly everything is cheaper in the North compared to London. The minimum wage should be at least regional if it does exist at all. Even the unions acknowledge that by calling for a London weighting on wages.

Antisthenes said...

"That’s because the money’s run out"

How very true and is that situation about to improve sometime soon? Indeed it is not. As austerity bites ever more deeply the populace do not like it, understandably, and do not see why they have to suffer as they see it as not their fault but the governments. They fail to realise that it is indeed their fault they wanted an economy and society based on social democratic policies and practice and insisted on governments whose ideologies were consistent with that or governments that would not stray from that goal too much. Social democracy mainly introduced by the Labour party and the EU have brought the UK and most of Europe to their knees and to the point of virtual financial and social collapse. Instead of recognising the cause of the current crises and demanding reform and proper economic prudence the populace are demanding that the architects of their current miseries policies and practices should be reinstated. Well the populace are going to get all the deserve and more. The pity is that us the sensible minority are going to also suffer when it is actually not our fault at all as we never subscribed to social democracy and warned about the dangers of it but were not heeded.

Jim said...

Um isn't it the case that if you tax the 'living wage' you end up with take home of around the current gross minimum wage? So the logical conclusion to draw is that taxes (income or NI) shouldn't start at all until you earn at least £12K pa? And that tax and benefit simplification (stop taxing people then making them fill in complicated forms and giving them some money back) is infinitely preferable to inventing new ways of beating employers over the head?

JohnRS said...

I wonder what the take home pay of the living wage after tax is, compared to the minimum wage if it didn't get chopped by NI and PAYE?

Surely the best cure to increase the money these low paid folk have to spend is to raise the tax thresholds so the minimum wage is exempt from all payroll taxes?

Sorry lefties, this might mean the gravy train has fewer coaches in future.

Tatty said...

"ensure that the wages you pay are enough to secure an adequate standard of living .

"Adequacy" being measured on the same sliding scale as "Poverty" ...which has no definition...I take it.

Maybe one day someone, somewhere will actually decide once and for all that people will only ever be paid for what they "need" as opposed to what they "want" ...and then they'll be sorry.

People really should be careful what they wish for.

Mad Fraser Francis said...

Simple matter for someone to work out on tax credits:

1/ How much is paid out annually in tax credits?

2/ How much does it cost to administer these same tax credits and how much would the country save by sacking those involved in this administration?

3/ How much does this equate to in terms of raising the personal allowance for or in the basic rate of tax?

Anonymous said...

Years ago I saw the results of the minimum wage in the USA. Every job advert for anything requiring minimal qualifications and experience said "minimum wage". A minimum wage becomes the 'norm'.

Besides, we tax people on the minimum wage and take NI.

The rest, in London, is about the massive cost of living.

David Gillies said...

Presumably these people are not starving to death. So they are being paid a living wage. It might suck, but cleaning is not a very difficult job. Unpleasant, arduous, boring - yes, but really involving very little skill. It is labour intensive and at the current level of technology, not readily substitutable with capital. Thus it is inevitable that it will tend to be staffed with the lowest productivity workers, and said workers will be remunerated accordingly. By paying over the odds, and out of a finite pool of money available for wages, who is paid less than they should be?

There is a case to be made for removing the lowest paid from the tax system altogether, although I don't think adequate account is taken of the moral hazard of allowing people to exist on government largesse while still permitting them to influence the disposition of that largesse via the ballot box.

Polly Tuscanbee said...

Are we ignoring the elephant in the room of uncontrolled and EU sourced immigration distorting the supply and demand in Londanistan?

Only in Guardian-land does massively increasing the supply of labour not drive down its price, and only in Guardian-land does massively increasing the demand for housing not drive up the price.

JuliaM said...

"That's a bit rich coming from The Grauniad who pay their interns the square root of bugger all."

Good point!

" missed one word out. "National" minimum wage."

Good point. When (if!) they get to introduce regional pay deals for civil service pay, will they then do it for the minimum wage?

"The pity is that us the sensible minority are going to also suffer when it is actually not our fault at all..."

Ain't it always the way?

"Um isn't it the case that if you tax the 'living wage' you end up with take home of around the current gross minimum wage?"

Yup! Taxing those on the minimum wage is a nonsense, designed to keep civil servants in a job.

JuliaM said...

""Adequacy" being measured on the same sliding scale as "Poverty" ...which has no definition...I take it."

It is whatever the 'Guardian' declares it to be!

"Presumably these people are not starving to death."

No, indeed.

"Are we ignoring the elephant in the room of uncontrolled and EU sourced immigration distorting the supply and demand in Londanistan?"

I'm certainly not! But yes, the 'Guardian' is...

Anonymous said...

Tax credits ?
2010-2011 = 28.925 billion
2009-2010 = 27.651 billion

Total benefits bill (inclusive of state pension) = 169.960 billion

Total benefits bill = 164.048 billion

Anonymous said...

Employers have long stated that the minimum wage does not affect them much.
There are a large number of people paid much less than the official minimum wage. Don't forget the "black" immigrants (not skin colour, but similar to the black economy) who do not exist on stats...some 500,000 plus.
£6.08 - the main rate for workers aged 21 and over
£4.98 - the 18-20 rate
£3.68 - the 16-17 rate for workers above school leaving age but under 18
£2.60 - the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship.
Yep, goin' to break the bank.
This is an expensive country to live in.
Council tax is nothing more than legalised extortion, and doesn't even pay the council much, which is why you pay through the nose for other services (such as parking fines).
Go to the usa and you get a meal to burst your stomach for less than the uk price of fish and chips.
And stop the endless socialist crap...this co-alit-ion gov is more left than the last labour government...people don't want to pay for public servants pensions....yes...what about the 38 billion paid last year in subsidies to private pensions ?
Hmmm ?
hey...we've got multinational companies that pay less (as a percentage) of their profits in tax than their employees...those that pay any and don't exist on tax-haven-heaven.

Anonymous said...

A doctor, an engineer and a politician were traveling together in the countryside. They stopped at a small country inn for the night. “I have only two rooms, so one of you will have to sleep in the barn,” said the innkeeper. The doctor volunteered to sleep in the barn, went outside, and the others went to bed. A short time later they were awakened by a knock. It was the doctor, who said, “There’s a cow in that barn. I’m a Hindu, and it would offend my beliefs to sleep next to a sacred animal.” The engineer said he’d be willing to sleep in the barn and left. The others went back to bed, but soon were awakened by another knock. It was the engineer, who said, “There’s a pig in the barn. I’m Muslim, and I can’t sleep next to an unclean animal.” So the politician was sent to the barn. It was getting really late, the others were very tired and soon fell asleep. But then they were awakened by an even louder knocking. They opened the door and were surprised by what they saw: It was the cow and the pig!

Original Article at Witterings from Witney

Anonymous said...

The concept of a living wage is crazy.

Some people in London pay very little rent for council housing near their work.
Others pay a lot and have to pay travel as well.
So some need a lot less money to live than others.
Of course if council tenants paid the same rent as the rest of us it would make sense.

Anonymous said...

The problem my wife has with her company is, that when she pays more than the minimum wage those higher up the food chain want more, as they then feel their worth is being eroded.

She pays about 5% over the minimum wage, but this is not allways enough. Her profit margins (sorry all you socialists) are waffer thin, if you want people to earn more you either have to pay more for the product or better still get the idle buggers to work harder.

Anonymous said...

Council (now mainly housing associations (charities)) charge around 75%+ of comparable private rent.
And, of course, private renters also get housing benefit/council tax benefit even though their rents and tax are higher (both can be claimed even by working people depending on income)
Social housing still makes a profit even when charging 20% less rent than private....hmmm..