Many are struggling to survive on the minimum wage, yet HR is silent on the
level at which it should be set
"The level of exploitation was really very concerning. When we saw what
they were paid and what they actually did, it was heartbreaking. We saw working
practices that we thought we had lost in the last century."
So said Stephanie Monk, HR director of Granada Group, who sat on the Low Pay
Commission (LPC) until last year (after picking up a CBE). She probably doesn’t
move in sweatshop circles.
This is the only public acknowledgement I can find from anyone connected
with the HR world during the last seven years on the social and moral aspect of
poverty pay in Britain.
There are of course great forests of the obvious stuff employers have been
coming out with for two centuries on the subject of wage protection.
"It [the National Minimum Wage] could be the last straw for employers
who are already struggling to survive on low margins," fretted John
Stevens, director of professional policy at the then IPD in August 1996,
calling for "further consideration" of a rate between £3.00 and £3.50
an hour (it was introduced at £3.60 in April 1999).
The HR divide
This is surprising. I know HR is supposed to have strategically aligned its
conscience out of existence, but nevertheless, I suspect many in the profession
feel more divided about low pay than their stereotype allows.
Like the two halves of a John Gray book, a bit of them will be Venus, able
to see the world from someone else’s perspective; the other is martial Mars,
who knows it’s a jungle out there. But I shall just have to go on suspecting,
because only Mars is allowed a voice.
Except that is not quite true. The CIPD has decided to hold itself aloof
from what it regards as the seedy, self-interested scraps between unions and
business organisations on what the minimum wage rate should be.
Its view is that the LPC is doing a good job and should be left to get on
with it. That is why the CIPD has said nothing since that far-sighted statement
of 1996. No voice, then.
Here is a curious intellectual position: the presence of a state-backed
arbiter makes opinion redundant – as if viewpoints function only where the
state doesn’t. Thankfully, the institute is not consistent; it hasn’t abandoned
opinions on diversity because of the Equal Opportunities Commission, nor on
skills because of the Learning and Skills Council. Which makes its stance on
low pay all the more peculiar.
Righteous passivity
In a debate characterised by business indifference to injustice and union
indifference to the economic environment, the profession charged with the
man-agement of people has chosen the path of righteous passivity.
It’s a good job the Government has not lost hope. Monk has been replaced on
the LPC by Angie Risley, HR director of the Whitbread Group – a company that
prior to 1997 was militantly hostile to the minimum wage, but, like others, has
since mellowed.
What should be the nature of a distinctive HR contribution on the minimum
wage? It’s not easy. Few would want to identify with traditional business
parsimony when the doom-laden predictions were so wrong. The success of the
National Minimum Wage is a strong argument for increasing it gradually.
The new rate from this October of £4.50 is still sub-survivable in the South
East, unless you do two or three jobs. Moreover, many must sense the
re-distributionist tilt the LPC is taking.
"All the signs are… that the minimum wage can now be increased as a
percentage of average earnings – benefiting more workers – without producing
damaging economic effects," writes chairman Adair Turner, in the LPC’s
fourth report.
It would be tempting to merely make technical points: the case for regional
minimum wages, for instance, the lack of enforcement (just 96 people do this
task) or the importance of accurate data (the Office for National Statistics
fluffed estimates of the low paid, effectively short-changing millions). Yet
that will not do: the relative position of the low paid is a primary employment
relations issue.
What’s the solution?
There will always be a tension between affordability and justice, yet one
clue to a possible stance might be to ask a new question: what settlement on
low pay is most desirable for good people management?
The question surely implies support for a relevant, rising pay floor and a
repudiation of race-to-the-bottom labour economics.
In fact, if the Venus in them was un-gagged for a minute, most HR
professionals would acknowledge that social justice issues at work are the
greatest de-motivators, the greatest dis-incentivisers, the greatest bars on
discretionary effort, and one of the greatest thwarters of their endeavours
(after CEOs).
Paying as many as a third of the British workforce less than the EU decency
threshold of £7.32 risks rendering discussion of high-performance work
practices pie-in-the-sky. One or two old-fashioned souls may even wistfully reflect
that the Labour Party’s original plan for a rate set at half male median
earnings – £5.38 – is not so far from the demands of social responsibility,
fairness, and high quality HRM.
HR professionals have an admirable desire to be practical. ‘People are our
greatest asset’, is not practical.
Debate about the minimum those ‘assets’ should expect, would be very
practical indeed. Speak up.
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