Sajid Javid has stolen Labour’s idea of increasing the National Living Wage, aka the minimum wage, to £10 and seemingly (but not actually) increased the offer to £10.50 by putting in a five year “aim.” I suppose the Labour Party should take this imitation as a compliment, but the imitation is a cheap one. We can’t be fooled by this half-hearted and cynical attempt to woo low income workers – here’s why.
In the past 40 years, the average worker has been shafted again and again and again. They’ve seen their share of wages fall while profits have risen, and within that falling wage share they’ve seen the top 10 percent, and, in particular, the top one percent take a larger and larger share of the pie – from six to 14 percent of total earnings in the UK. Wages are so out of whack that the average FTSE 100 boss earns more than what the average worker earns in a whole year in just three days. Chief executives of leading UK companies are now paid 133 times more than the average worker. Just multiply your wage by 133 and think about that sum. Does anyone’s boss work 133 times harder?
“Workers – the real wealth creators in this country – should not have to wait for the next time the Tories are trying to win an election to get a real terms pay rise.”
The last decade has added a new wave of punishment for workers. We have seen the biggest squeeze in median wages since the Neapolitan wars 200 years ago. Many public sector workers saw their wages frozen under the guise of the need to lower public spending (read: Pay for the mistakes of bankers and shrink the state). The number of insecure and zero hour contracts has soared to one in nine workers. Add to this, increasing housing costs, food and energy prices. Yes, this means low waged workers are desperate for cash, but it doesn’t mean that a rise in the NLW to two thirds of a meagre average wage is enough.
The big issue here is one of understanding why we are where we are. Why have workers been so hard done by? The key reason is power. Unlike in the 1950s, 60s and 70s, workers are not longer organised via unions or covered by collective bargaining proposals. These proposals meant that wages were set with business owners and government to ensure workers were getting their fair share. For the most part workers no longer have the ability to negotiate and stand together against greedy bosses. Power has dramatically shifted to the top, and, with it, so has profit and income.
The Labour Party gets this, that’s why we propose a new government department to consider the needs of 32.5m workers, the Ministry of Employment Rights. This ministry will be tasked with bringing together workers, bosses and government to set fair wages and workers’ conditions at the sectoral level. This is exactly what is done in the more equal, and indeed more productive and prosperous countries like Sweden and Denmark.
Without this wider reform, the increase in wages will effectively be like allowing workers to buy new skates but leaving them on thin ice. Workers will continue to be faced with insecure work, and could see hours cut as wages rise as employers fight to maintain profits. In the public sector, announcements about the end of public sector pay caps from the previous Chancellor Philip Hammond were met with dismay when it was uncovered that departments would not be given extra cash for this pay rise – a classic example of robbing Peter to pay Paul.
Workers – the real wealth creators in this country – should not have to wait for the next time the Tories are trying to win an election to get a real terms pay rise. They should be able given pay rise but also the ability to stand up for themselves against the greed that has marked our economy for the past 40 years.
Faiza Shaheen is the director of the Centre for Labour and Social Studies and the Labour candidate for Chingford and Woodford Green