The Case for a Statutory Living Wage

I always find that, in re policy at least, Liberal Youth tends to be much more interesting and innovative than the main party. If I recall correctly, we spent most of that wet week-end in Brighton a few weeks ago discussing ‘Revitalising the Rural Economy‘ and other such similarly scintillating stuff. Whereas at Liberal Youth Conference (Manchester, November 2012), on the other hand, we grappled with the world. We talked about the civil war in Syria. We discussed the repression in Gaza. And we also floated the idea (currently sitting in a box in LY Policy Committee marked ‘Handle with Care’) of a statutory living wage.

A statutory living wage? A thousand eyebrows raise themselves. After all, many internationally competitive business in Britain pays living wages on a voluntary basis already. But the low-skilled service sector often does not. It has been scientifically calculated that people need £7.45 per hour (£8.55 in London) in order to live a civilised existence, and the minimum wage for over 21s is only £6.19 per hour. This means that many people are being paid less than they need to live. The argument against that surely speaks for itself.

Is it not speaking loud enough? Let’s look at it from an economically liberal perspective. Currently, the difference between the minimum wage and the living wage is made up by benefits (p.4), to prevent people starving. In other words, the state is effectively subsidising certain businesses to the tune of a couple of quid per worker per hour so that they can continue with this unethical practice. A living wage would reduce the need for in-work benefits, thereby slashing the welfare bill. This saving would enable the government partially to compensate businesses which had lost out. Introduce this, and we would be really much further towards realising Nick Clegg’s vision of ‘a stronger economy in a fairer society’.

Actually, and forgive me if I’m moving a little off-piste here, one of the things that vexes me about our leader is the way in which he seems to disdain genuinely radical ideas in favour of occupying what he calls ‘the centre ground’. The centre ground is a grim place which was dragged heavily rightwards by Thatcher in the early 1980s and has barely shifted since. Our party, by contrast, has traditionally offered a radical non-socialist alternative; in Jo Grimond’s words, we aim ‘to replace the Labour Party as the progressive wing of politics in this country‘. Let New Labour and the Tories vie for the vote of ‘aspirational’ Mondeo Man (and it is a man), with his small business, his white van and his susceptibility to dog-whistle politics on immigration and crime engendered in him by the Daily Mail. The Lib Dems did so well in the Noughties because we appealed to different values. Communitarian values. The values of public-sector workers, women, students- everyone, pretty much, who wants to work hard and get on but doesn’t want their neighbour left behind.

To rebuild this successful coalition we need some radical policies for the next election. Instituting a legal living wage is a good place to start.

Reece Edmends is Non-Portfolio officer on the Liberal Youth exec. He is from Staffordshire, formerly studied at Newcastle-under-Lyme School and will be taking up a place at university in 2013. He enjoys politics, literature, history, music and golf.

This article is solely the view of the author and should not be taken as the views of Liberal Youth, the Liberal Democrats, nor the editorship of the Libertine.

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6 thoughts on “The Case for a Statutory Living Wage

  1. Completely agree. I think you could make it fairly easy on business as well. The current system seems to involve the government taking away money from businesses (tax) and then giving it back to the poorly paid (welfare). If a living minimum wage was introduced, followed by an increase in the personal tax allowance, welfare for those in work could be significantly dropped, the savings then used to reduce business tax, specifically for businesses with a large number of employees. The downside I can see would be an increased incentive for businesses to reduce their number of employees. There could be an incentive given by the government to prevent this, or just hope that reduced taxation increases businesses anyway.

    Lybertine has been really active recently, keep it up!

  2. ..and the Tories and LIB DEMS are thinking of cutting the minimum wage. Funnily this is the responsibility of BIS – a department run by two Lib Dems, Vince Cable and Jo Swinson! Next minute you will be calling for a reduction in tuition fees.

    1. Thanks, I am trying hard to make it policy for Liberal Youth, which hopefully feeds in to Lib Dem policy.

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