Opposition leader Ed Miliband has unveiled plans that would give millions of workers a “living wage” of at least £7.45 should Labour win the next election.
In a speech to start Living Wage Week, the promise is a key part of Miliband’s One Nation vision for Britain, which he launched at last month’s Labour conference. Miliband said: “There are almost five million people in Britain who aren’t earning the living wage. Too many people … are doing the right thing and doing their bit, helping to build the prosperity on which our country depends, but aren’t sharing fairly in the rewards.”
According to a report last week from think tank the Resolution Foundation, the UK stands out for the large scale and poor quality of low wage work, with one worker in five paid below the living wage, hitting part-time workers and women in particular.
The existing minimum wage is £6.19 per hour for those aged over 21, £4.98 for those over 18, and £3.68 for 16- and 17-year-olds.
Miliband said he will look at how to make sure companies are reimbursed for paying their employees more, with one idea being to use the savings gained through reduced tax credits to give them companies tax breaks.
He also put forward the idea of naming and shaming companies mooted in the report, which said: “The state should reinforce changing attitudes to pay by requiring companies to report the proportion of their workforce paid below thresholds like the Living Wage.”
A number of major firms already pay workers and contractors a living wage or higher, while 19 local authorities have been accredited as “living wage employers”, including Newcastle City Council. Miliband himself unveiled the new policy at Islington Council in London, which recently became another living wage employer.
But critics argue that many employers cannot afford to pay more. According to the report: “The impact in some large, low-wage sectors, such as bars, restaurants and retail, is significant (though lower than we anticipated), causing between a 5% and 6% increase in the total wage bill.” In contrast, though, it continues: “For large companies in sectors such as banking, construction and software/computing – which employ over one million low-wage workers – paying all workers the living wage would mean an increase of less than 0.5% of the total wage bill.”
Meanwhile, London mayor Boris Johnson announced that the living wage rate for workers in London, where the cost of living is higher, will increase by 25p an hour to £8.55, and urged businesses to “wake up” to the huge benefits that paying the living wage delivers.
“By building motivated, dedicated work forces the living wage helps businesses to boost the bottom line and ensures that hard working people who contribute to London’s success can enjoy a decent standard of living,” he said.
And in what might be a seen as a backhanded compliment for the recipient, Miliband said: “It is good that Boris Johnson is supporting the London Living Wage today, building on the work of Ken Livingstone,” before adding that Johnson is the only Conservative local authority leader to run an authority paying the living wage.
Dave Prentis, Unison general secretary, warmly welcomed the move, saying: “The new rates announced today will help families to make ends meet at a time when the cost of basics such as food and fuel have been rising. The challenge now is to close the gap between the national minimum wage and the living wage.”