The minimum wage was introduced in the UK under Tony Blair's Labour government with the National Minimum Wage Act 1998. It was in part a response to the declining trade union movement which led to less bargaining power for workers and thus lower wages. Initially it had two levels of minimum wage, £3.60 for adults aged 21 or over and £3.00 for those aged 18 to 20. There was opposition from Conservative MPs and business owners claiming that businesses will have to sack people as they would not be able to afford to employ them any longer. Fortunately however this did not happen on mass when minimum wage was introduced. In 2003 a minimum wage for 16 and 17 year olds was introduced at £3.00, while 18-20 year olds had £3.80 and over 21s £4.50. In 2010 a minimum wage for apprenticeships was introduced and set at £2.50 an hour. This may look like a good thing, but having a minimum wage for apprenticeships much lower than normal minimum wage has resulted in many jobs being described as an apprenticeship so that a company can get away with paying someone less money.
There is one big problem with the minimum wage. Before the minimum wage was introduced companies had to pay a competitive rate of pay. Since minimum wage has been introduced many employers have lowered their pay to minimum wage, or slightly higher. Competitive rates of pay in some industries have become about how much above minimum wage a job will pay. Often companies will justify low pay by stating something along the lines of "well it is a whole 50p above minimum wage". This wouldn't be a problem if the minimum wage was more than enough to live on, but it barely is.
Years of minimum wage being increased below inflation levels has brought more people and more families into poverty. This has pushed low paid workers into poorer areas, which are often further away from work which increases both travel time and travel cost. There are vast areas of London and the rest of the country where people on minimum wage just cannot afford to live in. God bless any minimum wage worker with children as they are unlikely to be able to afford to treat their children to a holiday or other such things many of us have taken for granted in our childhood. Child poverty really gets to me, and is a strong reason why I am an eco-socialist. People need to be paid a decent wage so we can help avoid child poverty. All children deserve a good happy childhood.
Another big problem with minimum wage is that it is set so low that workers on minimum wage can claim benefits which costs the government a lot of money. Working Tax Credits, currently set around £50-55 a week to any low paid worker over 25 years old working 30 hours or more is proof alone that minimum wage should be increased by at least £1.66. £29.91 billion was spent on tax credits in 2011-12, a whooping £25 billion more and more than 6 times higher than all job seeker's allowance. This money is basically subsidising businesses who should be paying a higher wage. There are a whole host of other benefits that are going to people in low paid jobs. Housing benefit is the second largest state benefit after state pensions and a lot of this is being paid to people currently in work. Subsidising low wages is an expensive job for the government. Increasing minimum wage to the living wage would lower the amount the government spends on helping out low paid workers.
The idea that increasing the pay of the lowest paid will lead to financial ruin for businesses is absurd. The industries which employ people on minimum wage are also the industries with the largest turnover of staff. A high turnover of staff leads to more time and money spent on training up new members of staff. A lower turnover of staff and a higher satisfaction level for staff leads to higher productivity in the workplace. The living wage offers just that - happier and more productive workforces. It would save some businesses money rather than cost them extra money.
The Living Wage has a lot of support throughout society. The Green Party's policy supports the living wage in absence of a citizen's income:
"WR361 To these ends we propose (i) a Citizens Income payable to every citizen as a basic right, funded by an ecological and genuinely progressive taxation system, and (ii) a significant role for unions and workers to ensure decent wage levels. In the absence of a fully developed Citizens Income scheme, we support (a) the idea of minimum wage legislation, set at a level to combat social and economic injustice and the poverty and economic insecurity associated with low pay, and (b) the payment of decent benefits to low-and un-waged people."
Many councils across the country are becoming living wage employers, including the Green administration in Brighton and Lancaster where the Greens hold the balance of power. The London 2012 Olympics was the first ever living wage Olympics. It's time for the government to seriously consider making the minimum wage the living wage.