Large firms in industries such as construction, banking and computing can afford to pay well above the national minimum wage and give their staff a so-called living wage, a new report argues.
Two think-tanks said more than six million people earned below the living wage, which is set at £8.30 an hour in London and £7.20 outside the capital, compared with the statutory rate of £6.08.
The Resolution Foundation and the IPPR said big companies in many sectors of the economy would only face a 1% increase or less in their pay bill if they switched to a living wage.
More than 600,000 people worked for less than the living wage in banking, finance, insurance and real estate, another 600,000 in manufacturing, 260,000 in transport and computing and 180,000 in construction, and firms should be challenged to explain why they could not increase basic pay, said the report. A third of women and one in five men earned less than the living wage with the highest percentages in areas including the North East, Yorkshire and the Humber, Wales and the West Midlands, the study showed.
What’s a “living wage”? It is enough to ensure low paid workers earn enough to provide for themselves and their families.Presumably what they have in mind is a wage that would allow a worker to afford decent housing, enough proper food, new clothes, to go on holiday and run a car. It’s an old demand of reformists going back to the ILP in the 1920s. £8.30/£7.20 an hour hardly qualifies as an adequate “living wage”. Getting employers to increase the wages is easier said than done. The unions haven’t been able to do it, otherwise they would have been done so. But let’s assume for a moment that a law forcing them to do this was passed. What would happen?
Let’s get one thing clear from the start. We have nothing against workers struggling for and getting higher wages if they can. We favour this. So, we hope the campaign to get employers to pay some of their workers more succeeds.
There would be some unintended consequences. We would point out that even if implemented, wouldn’t have had the expected effects.
First, some employers would go bankrupt. Others would withdraw their capital from producing certain goods or services, so their price would rise. Eventually this would stabilise at a new, higher level at which employers would be able to make a profit even when paying the increased minimum wage. So the cost of living would go up, including for workers on the minimum wage.
Second, given the increased labour costs, the introduction of previously un-used labour-saving machinery would become cheaper vis-à-vis employing living labour. Employers would do this. (An example of this in reverse would be how many garages have abandoned car washing machines as hand washing has become cheaper). So there’d be job losses and unemployment, particularly amongst the unskilled, would go up.
A living-wage might reduce the gap between low-paid and higher-paid workers, but this would just be a change within the working class – what we call the “redistribution of poverty” – which would not affect the gap between the income of the working class and that of the capitalist class. In any event, socialism is not about redistributing income and wealth from the rich to the poor, but about establishing a society that would not be divided into rich and poor. Marx didn’t think much of such demands as “fixing the minimum wage by law”, which was one of the reform demands of the French Workers Party he had a hand in helping to set up in 1880. He wrote, referring to the proposer of this: “I told him: ‘If the French proletariat is still so childish as to require such bait, it is not worth while drawing up any program whatever.’ ” (Letter to Sorge, 5 November 1880)
To adapt one of Marx's slogans, workers should replace the demand for a “living wage” by the revolutionary demand for the “Abolition of the Wages System”.
Two think-tanks said more than six million people earned below the living wage, which is set at £8.30 an hour in London and £7.20 outside the capital, compared with the statutory rate of £6.08.
The Resolution Foundation and the IPPR said big companies in many sectors of the economy would only face a 1% increase or less in their pay bill if they switched to a living wage.
More than 600,000 people worked for less than the living wage in banking, finance, insurance and real estate, another 600,000 in manufacturing, 260,000 in transport and computing and 180,000 in construction, and firms should be challenged to explain why they could not increase basic pay, said the report. A third of women and one in five men earned less than the living wage with the highest percentages in areas including the North East, Yorkshire and the Humber, Wales and the West Midlands, the study showed.
What’s a “living wage”? It is enough to ensure low paid workers earn enough to provide for themselves and their families.Presumably what they have in mind is a wage that would allow a worker to afford decent housing, enough proper food, new clothes, to go on holiday and run a car. It’s an old demand of reformists going back to the ILP in the 1920s. £8.30/£7.20 an hour hardly qualifies as an adequate “living wage”. Getting employers to increase the wages is easier said than done. The unions haven’t been able to do it, otherwise they would have been done so. But let’s assume for a moment that a law forcing them to do this was passed. What would happen?
Let’s get one thing clear from the start. We have nothing against workers struggling for and getting higher wages if they can. We favour this. So, we hope the campaign to get employers to pay some of their workers more succeeds.
There would be some unintended consequences. We would point out that even if implemented, wouldn’t have had the expected effects.
First, some employers would go bankrupt. Others would withdraw their capital from producing certain goods or services, so their price would rise. Eventually this would stabilise at a new, higher level at which employers would be able to make a profit even when paying the increased minimum wage. So the cost of living would go up, including for workers on the minimum wage.
Second, given the increased labour costs, the introduction of previously un-used labour-saving machinery would become cheaper vis-à-vis employing living labour. Employers would do this. (An example of this in reverse would be how many garages have abandoned car washing machines as hand washing has become cheaper). So there’d be job losses and unemployment, particularly amongst the unskilled, would go up.
A living-wage might reduce the gap between low-paid and higher-paid workers, but this would just be a change within the working class – what we call the “redistribution of poverty” – which would not affect the gap between the income of the working class and that of the capitalist class. In any event, socialism is not about redistributing income and wealth from the rich to the poor, but about establishing a society that would not be divided into rich and poor. Marx didn’t think much of such demands as “fixing the minimum wage by law”, which was one of the reform demands of the French Workers Party he had a hand in helping to set up in 1880. He wrote, referring to the proposer of this: “I told him: ‘If the French proletariat is still so childish as to require such bait, it is not worth while drawing up any program whatever.’ ” (Letter to Sorge, 5 November 1880)
To adapt one of Marx's slogans, workers should replace the demand for a “living wage” by the revolutionary demand for the “Abolition of the Wages System”.
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