Twenty years ago next April, after a century resisting the idea, the UK Government finally brought in a compulsory minimum wage of \u00a33.60 an hour.\u00a0 That\u2019s either \u00a35.30 or \u00a36.20 an hour in today\u2019s prices (depending on which inflation index you believe).\u00a0 This felt pretty low, but at least outlawed the lowest wages paid in sweatshops.<\/p>\n
If, on the day in 1999 that the National Minimum Wage was introduced, you\u2019d told me that campaigners two decades later would be using our research to advocate a \u2018living wage\u2019 about 50% higher than this, I\u2019d have been pleased but not optimistic about their success.<\/p>\n
If you\u2019d said that over 4,000 employers ranging from the Scottish Government to IKEA would by then have committed to paying this rate, I\u2019d have been somewhat incredulous.<\/p>\n
But if you\u2019d told me that a Conservative government would have taken up the idea of such a Living Wage, leading to a 26% increase in the compulsory minimum for over-25s in the space of four years, with ambitions to raise it further, I would have taken another look at the calendar, and realised it was April the 1st<\/sup>.<\/p>\n The Living Wage Foundation<\/a>\u2019s effort to ensure that workers are paid enough to afford an acceptable living standard (as calculated by our Minimum Income Standard<\/a> team) has been an exemplar of campaigning success.\u00a0 Impressively, since the Government tried to steal its clothes by introducing the lower and but compulsory National Living Wage (NLW) in 2016, it has only grown in reach, with ever more organisations recruited as Living Wage Employers. \u00a0It seems like official endorsement of the principle of the living wage makes employers keen to sign up to the real thing, not least because the gap between the NLW for over 25s and the real living wage outside London is not all that great. \u00a0(However, there is a wider gap with the higher London Living Wage, and for under-25 year olds, who have a lower compulsory minimum.)<\/p>\n And here\u2019s why the next two or three years will be crucial. \u00a0This gap between the compulsory NLW and the real, voluntary UK Living Wage has actually been shrinking considerably in recent years, as seen in\u00a0Figure 1\u00a0(the zig-zags are caused by the two levels being uprated at different times of the year). \u00a0By next April it will have halved in four years to below 80p an hour: for the first time falling below 10%.\u00a0 If you only looked at this graph, you might think that within a couple of years the Living Wage Foundation\u2019s main job will have been done, although they will still need to campaign to rectify the wider pay gap for those on the minimum in London and for under-25-year-olds.<\/p>\n
![Figure 1\u00a0–\u00a0Comparison\u00a0between\u00a0National\u00a0Minimum\u00a0wage\u00a0for\u00a0over-25s\u00a0and\u00a0real\u00a0Living\u00a0Wage\u00a0outside\u00a0London,\u00a02014-19<\/a><\/p>\nBut the policy that has caused this convergence, the Government\u2019s commitment to raise the NLW to 60% of median pay, will be completed in 2020.\u00a0 After that point the original aim was to peg it at that 60% rate. \u00a0The risk is that even if such a commitment is kept, NLW recipients could become worse off again if living costs rise faster than median pay rates, which can happen in an economic downturn.<\/p>\nYet last week saw another twist to the story, which would have seemed even more mind-boggling to my 1999 self. In considering in his Budget what would come next, the Chancellor expressed the ambition of moving the NLW from 60% to two-thirds of the median wage (the threshold of \u2018low pay\u2019 as conventionally measured) in due course.\u00a0 This further ambition would not only fix a compulsory \u2018pay floor\u2019 higher than for almost any other country, but by adding nearly \u00a31 more to its level would under present conditions move it slightly above<\/em> the real, voluntary rate.<\/p>\nBut unlike the plans for its first five years after George Osborne announced the NLW in 2015, this is an ambition rather than a political pledge. By undertaking to consult the Low Pay Commission, which looks closely at the economic effects of increases in the compulsory minimum, Phillip Hammond is once again changing the rules of the game.\u00a0 This is sensible: you can\u2019t go on legislating higher pay forever without regard for whether employers are willing and able to create jobs that pay it.\u00a0 Now is a good time to tread cautiously, testing whether convergence between minimum pay rates and minimum worker needs is feasible without creating an unacceptable rise in unemployment.\u00a0 This is likely to mean more gradual increases in real minimum pay rates than have been seen in the past three years.\u00a0 But the fact that this is being done under an officially-endorsed project to end low pay is an extraordinary development. And the voluntary campaign to adopt a living wage will continue to play a crucial role in holding government and employers to this ambition.<\/p>\nTo understand more about the living wage, read<\/em> The\u00a0Living Wage<\/a><\/em>\u00a0<\/em> by Donald Hirsch and Laura Valadez<\/em>\u00a0 <\/em><\/p>\n “An admirable introduction to the\u00a0Living\u00a0Wage…highly readable, incisive analysis…this is the book to have.”\u00a0<\/em>Journal for Social Policy<\/p>\n","protected":false},"excerpt":{"rendered":"Twenty years ago next April, after a century resisting the idea, the UK Government finally brought in a compulsory minimum wage of \u00a33.60 an hour.\u00a0 That\u2019s either \u00a35.30 or \u00a36.20 an hour in today\u2019s prices (depending on which inflation index you believe).\u00a0 This felt pretty low, but at least outlawed the lowest wages paid in […]<\/p>\n","protected":false},"author":210,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[11],"tags":[],"class_list":["post-269","post","type-post","status-publish","format-standard","hentry","category-living-wage"],"_links":{"self":[{"href":"https:\/\/blog.lboro.ac.uk\/crsp\/wp-json\/wp\/v2\/posts\/269","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blog.lboro.ac.uk\/crsp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lboro.ac.uk\/crsp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lboro.ac.uk\/crsp\/wp-json\/wp\/v2\/users\/210"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lboro.ac.uk\/crsp\/wp-json\/wp\/v2\/comments?post=269"}],"version-history":[{"count":2,"href":"https:\/\/blog.lboro.ac.uk\/crsp\/wp-json\/wp\/v2\/posts\/269\/revisions"}],"predecessor-version":[{"id":272,"href":"https:\/\/blog.lboro.ac.uk\/crsp\/wp-json\/wp\/v2\/posts\/269\/revisions\/272"}],"wp:attachment":[{"href":"https:\/\/blog.lboro.ac.uk\/crsp\/wp-json\/wp\/v2\/media?parent=269"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lboro.ac.uk\/crsp\/wp-json\/wp\/v2\/categories?post=269"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lboro.ac.uk\/crsp\/wp-json\/wp\/v2\/tags?post=269"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}](\"https:\/\/blog.lboro.ac.uk\/crsp\/wp-content\/uploads\/sites\/37\/2018\/11\/comparison.jpg\"){kind=link}