22/08/2010

Plaid's Living Wage should be supported by both Right and Left!

During the last election Plaid Cymru proposed two policies that I would have expected every decent person to support. The first was for a fair pension, the second was for a living wage rather than a minimum wage. Both policies were opposed and ridiculed, not because they were bad policies, but because they were policies suggested by the wrong party.

I don't understand what the Labour Party has against the idea of a living wage. Surely such an idea should be a core Labour principal!

I don't understand why a Conservative should oppose such an idea either.

If an employee has less than a living wage s/he becomes a burden on the state, and has to have topup benefits out of the state's purse to give her/him a wage – his/her job is subsidies by the tax payer in the same way as his/her unemployment would be subsidised – what's the difference?.

If a person works his or her guts off for 60 hours a week but still needs state benefits to make ends meet, who is the scrounger? The mean employer, or the hard working employee?

There is nothing Conservative in underpaying an employee because you know that the benefit cheque will take up the slack in the wage bill.

The benefits bill needs to be reduced, without a doubt, but it needs to be reduced in a way that looks at the full picture.

I can't see a Socialist or Conservative value that should oppose Plaid's living wage, idea, so why don't both parties welcome Plaid's suggestion as part of the answer to a very big problem, rather than opposing it for opposition's sake just because it is a Plaid proposal?

18 comments:

  1. This comment has been removed by the author.

    ReplyDelete
  2. A conversation between two labourers working for a Merthyr Tydfil construction company about three years ago ...

    "we have to be careful that we don't lose our benefits, speak to J.... "

    The labouring fraternity at this company saw the need to moderate wages to maximise their earnings, they perceived earnings as wages plus benefits.

    Could it be the exploiters are those that created the benefits mess, by and large the middle classes, and the primary beneficiaries are surprise, surprise ... the middle classes.

    ReplyDelete
  3. Alwyn - With respect, it has nothing to do with these proposals being suggested by the "wrong party". Neither proposals are radically new, neither have not been suggested previously.

    A "living wage" may sound like an easy-to-implement and attractive panacea for all ills, but like all government interventions into the market it would also inevitably have unintended consequences.

    Minimum Wage laws (and Living Wage proposals are basically Minimum Wage laws on steroids) may seem to make life better for the poorest workers, but the reality is that they cause Employers to stop hiring less-skilled workers and therefore worsen the lot of poor and young untrained people in particular. Surely we can all recognise that we are currently experiencing record youth unemployment in Wales and throughout the country.

    It costs firms time and effort to train up young people who have little skills and experience - if they are also forced to pay them far more than their labour is currently worth (as the Living Wage proposals would force them to do) then companies will simply not employ young, unskilled people. The only gainers are workers above the minimum wage who no longer face cheaper competition.

    Regarding "Living Pensions" - I'm all in favour of them. But they cannot be legislated into existence by simply demanding that outcome. They have to be paid for somehow and the current pyramid-scheme-esque state pensions system (i.e. those currently working pay for the pensions of the retired) needs to be radically reformed as our population ages and the working base decreases as a proportion of the population. Politicians of all stripes have too long put off grasping this particular nettle.

    ReplyDelete
  4. Spot on Alwyn.

    What I don't get from the naysayers (me and druid had a ding dong when I raised something similar on my own blog) is why it is acceptable that someone working full time in Tesco is still poor enough to need state subsidy? Why should taxpayers essentially top up Tesco's wages?

    The same people who said the minimum wage would means millions of job losses are the same ones against the living wage. They should apologise first and foremost for such scaremongering, then accept that every time they talk of 'Government waste through benefits' should be reminded that billions is spent topping up Tesco's wages.

    http://plaidpanteg.blogspot.com/2010/07/silent-but-almighty-actor-in-making.html

    ReplyDelete
  5. And taken from my post on that site here is my reply:

    We used to have wage councils - introduced by Churchill because bad employers drove wages down for good employers. Their pay rates were modest - but they were supposed to be a living wage. The varied sector to sector but were an excellent safety net. Thatcher's government abolished them.

    Back in the 19th century a security system paid for by ratepayers topped up wages for the low waged to a basic living wage. Look it up - it was called the Speenhamland System see: http://en.wikipedia.org/wiki/Speenhamland_system. It resulted in employers (mainly in agriculture) to cut the wages of the poor.

    The current minimum wage is both too low and also has a disgraceful built in system of discrimination, one based on age and not ability. Why should a 16 or 18 year old worker be paid less than an older worker at the same skill level?

    If all fast food places had to pay a living wage, somewhat higher than they do now then there would be a level playing field as all similar establishments would be under same requirements.

    The fact remains that we are expected to subsidise low pay, that out of general taxation companies can reduce their wage bill. This is fundamentally wrong. A living wage should enable a person to rent a home, pay for their utilities, feed and clothe themselves and set some aside for a rainy day - that is not too much to ask for in my view, and anything less is pure exploitation.

    As for training, why not resurrect the Training Levy Boards, where industry wide an agreed charge was put on employers to create a training fund, which employers that provided training could draw from. All benefited and it could be run by the concerned industries themselves. Again why should the state pay for or subsidise the training costs for industry?

    ReplyDelete
  6. Druid it is not just the young, the inexperienced and the unskilled who need benefits to top up their wages. Go into almost any hairdressing salon in Wales and you will find fully qualified stylists with years of experience who get child credits and income support to top up their wages, there are farm labourers in Wales who have been working the land for 20 or 30 years who still get the basic minimum wage, there are retail workers who wear badges proudly declaring that they have been "part of the team since the year dot", who have their incomes topped up by benefits. In most cases the employers could well afford to pay a living wage, but choose not to because they know that the benefits system will subsidise their wage bills – they are callous benefits cheats and scroungers using the system to line the pockets of some of the richest people in society.

    People who need their wages topped up by benefits are not in full gainful employment they are on workfare; there may well be good arguments for supporting workfare, but I would hope that workfare schemes would be used in a way that benefits the community in a more meaningful way than serving junk food does.

    ReplyDelete
  7. "Research for the Ed Miliband campaign by the Institute for Fiscal Studies shows that companies paying below the "living wage" cost the taxpayer between £5.9bn and £6.3bn a year. "

    http://www.guardian.co.uk/politics/2010/aug/22/ed-miliband-minimum-wage-labour-leadership

    ReplyDelete
  8. As I seem to be the only contrary voice, I'm happy to carry on playing Devil's Advocate.

    Plaid Panteg says "why it is acceptable that someone working full time in Tesco is still poor enough to need state subsidy? Why should taxpayers essentially top up Tesco's wages?"

    I'll make two points: (1) Tesco currently employs 380,000 mostly low-skilled workers. If they are forced to increase even slightly the salaries of the vast majority of these workers, the total cost will be magnified by the sheer numbers of workers involved. As supermarkets like Tesco depend on providing cheap products, the likelihood is that Tesco will reduce its workforce and expand the number of automated checkouts to compensate. (2) Is the problem purely on the employers side or is there a case that inflation and government monetary policy etc. is also a factor in causing this situation?

    Cibwr says "A living wage should enable a person to rent a home, pay for their utilities, feed and clothe themselves and set some aside for a rainy day - that is not too much to ask for in my view, and anything less is pure exploitation."

    If all jobs irrespective of their value-added are required to provide a wage which can provide all that, where is the incentive for youngsters to apply themselves at school and beyond to gain the skills and experiences needed by modern businesses? Indeed where will be the incentive to apply yourself at work as you receive all that without having to apply yourself there either.

    Alwyn said "Druid it is not just the young, the inexperienced and the unskilled who need benefits to top up their wages."

    Thats a misrepresentation of my argument. I said that the young and unskilled in particular will suffer from a further raise to the minimum wage as in their "raw, uncut" state their economic contribution would be far less than the wage employers are required to pay them.

    Plaid Panteg says "Research for the Ed Miliband campaign by the Institute for Fiscal Studies shows that companies paying below the "living wage" cost the taxpayer between £5.9bn and £6.3bn a year. "

    I'll admit that the IFS proposals to reward companies which pay a living wage with reduced rates of corporation tax are interesting and need further thought. My initial question would be how robust are the IFS's stated savings to the Exchequer in reduced welfare payments (apparently between £3.4-4.1bn a year).

    ReplyDelete
  9. Quite right Alwyn. The best way to reduce the benefits bill is to ensure that jobs pay enough.

    ReplyDelete
  10. Paying below a level where you can only live by getting state subsidies is by definition exploitation. Its requiring the tax payer to pay a company to make profit. The incentive is that if you work hard and gain qualifications you can get a better paid job that will enable you to afford more of the nice things in life, like holidays and the odd luxury. Alwyn is right, the real scroungers here are the companies who profit from the taxpayer.

    ReplyDelete
  11. "Paying below a level where you can only live by getting state subsidies is by definition exploitation. Its requiring the tax payer to pay a company to make profit."

    Nail.On.Head

    ReplyDelete
  12. Cibwr - "Paying below a level where you can only live by getting state subsidies is by definition exploitation. Its requiring the tax payer to pay a company to make profit."

    Simply re-stating the above point does not make an argument - it is simply demagogy. Any company which consistently pays workers above the economic contribution of their work will eventually fail - this is the point you consistently fail to address. It is incumbent on workers to strive to improve their skills, generate more economic value through their work and move onto higher-skilled, better paid work.

    Furthermore, perhaps you should also consider whether the levels of taxation are two high - as this also has an effect on the take home pay of the workers and on the profit made by companies. It is already clear that Labour's welfare system can introduce a marginal tax rate of up to 98% on minimum wage persons working more than a certain amount of hours. We need to decide what is the appropriate size of the state - as currently for the first time in our history - it accounts for over 50% of our economic activity. All of this is funded by current or future taxes.

    ReplyDelete
  13. "Any company which consistently pays workers above the economic contribution of their work will eventually fail..."

    As defined by their own narrow self interested definition of what is 'contribution'...

    ReplyDelete
  14. I would say that any company that pays its employees less than the minimum that they can live on is living in an unreal world. They are not economically viable. Tesco is not one of those companies, it makes vast profits and gathers an indirect subsidy from me and all other tax payers. While there may be an argument for temporary subsidies to enable strategic industries to survive a day to day subsidy so that they can underpay their workers is exploitation. There really isn't an argument on this.

    As for taxation being too high, some of those low wage staff are paying little in the way of taxes. Perhaps you would like to tell us what services we should cut so that taxes can be cut? Make a case.

    ReplyDelete
  15. Link text

    This would be same as the Catholic concept of the Just wage.

    ReplyDelete
  16. With all due respect what benefits are we talking about here, I've worked for the min wage and tell me what benefits are you saying I'd lose, seeing as Labour have ended income support, income support was the benefit filler which was used to give people enough money to live on, and I know nobody in the building trade who ever had income support.

    The fact is we have always had people who wanted to pay cash in hand, three years ago i was on a Welsh program on BBC when an American cowboy came over here to find me a job, he did well he found me a job working in a café for ten quid a day, of course the café close three days later when i asked the question how many staff does this person have being paid £10 a day. The America said in the UK your all mad money is money.

    ReplyDelete
  17. Actually Cibwr the Druid makes a fair point when he mentions the level of taxation!

    The main top up benefit that the low waged get is "tax credit" – they are taxed by one department of the civil service, and then (after filling complicated forms) they are given a credit - the tax back - by somebody working in another department! It would be more efficient, less bureaucratic and more sensible for the beneficiaries to be taxed less rather than having to claim tax back. A stupid and wasteful situation!

    From an ultra right wing perspective, if a company can't afford its wage bill without depending on the benefits Giro to make up the shortfall it is unviable and in a true market lead economy it should fail. Would Tesco and MacDonalds fail if their wage subsidy was withdrawn? Probably not! And if they did fail who would miss them?

    Anon, one can still claim Income support:
    http://www.direct.gov.uk/en/MoneyTaxAndBenefits/BenefitsTaxCreditsAndOtherSupport/On_a_low_income/DG_10018708

    ReplyDelete
  18. Once solution to the ludicrous situation where you can be taxed and still get benefits would be the merging of the systems. I have no problem with that, effectively increasing the tax allowance - though tax credits only really benefit people with dependants at the moment.

    ReplyDelete