05 April 2013

By Roger Jeary

A suspicious instruction to the Low Pay Commission suggests the government wish to keep downward pressure on the national minimum wage - already too little to live on.

It is difficult to believe, (or maybe it isn't), that having attacked those who work in the public sector, then those who are dependent upon benefits, the Coalition is now aiming its guns at the lowest paid workers - those on the National Minimum Wage (NMW). In new guidance to the Low Pay Commission, the body responsible for recommending to government the level of the NMW, the government has told the body it must formally consider its impact on "employment and the economy", before agreeing future increases. The change, which will be written into the Commission's new terms of reference, raises the prospect of the first ever across-the-board freeze or cut in the minimum wage for everyone if the economic uncertainty continues.

Although the Telegraph reported this development on 1st April, nobody was fooled into thinking this was any kind of joke. At a current rate of £6.19 per hour the NMW falls far short of what is needed to provide a living wage, a fact recognised by most people and for many they get by having their wages topped up by tax credits. So what can be the thinking behind such a move? Apparently some shop keepers are complaining that the cost of their staff is too high and the government is concerned that the NMW is increasing to too high a proportion of average wages. So we are back to the same old argument that the weakest in society are pricing themselves out of a job. When is somebody going to remind businesses, and government, that the cost of labour is part of running a business and if they cannot afford a fair wage for their workers then they shouldn't be in business.

Last year, the young person's (aged between 18 and 20) national minimum wage rate was frozen at £4.98. To apply a similar criteria to the rates this year would be a kick in the teeth to those young people who have, against the odds, found themselves work, albeit at the lowest legal rate.

The Department of Business (headed by our friendly Lib Dem Vince Cable) has decided that the Commission must include in its remit "the understood and accepted goal to raise the wages of the lowest paid without damaging employment or the economy". As with all the other employment-related issues purported to create jobs this is yet another which will be unlikely to create a single additional job but instead provide a disincentive to those who might otherwise have been prepared to accept low paid work as a step towards something better.