Why do people think the minimum wage is there to provide a safety net?

Politicians and wages

WORKERS, FEB 2014 ISSUE

The national minimum wage came back into the headlines in January with the declaration by chancellor Osborne that he is in favour of increasing the amount set – though not for anyone below the age of 21 – above the rate of inflation.

August 2013, London: GMB members working for OCS Housing Estates Cleaning Contract in Kensington & Chelsea picketing during their strike for the London Living Wage.
Andrew Wiard/www.andrew-wiard.com

Osborne didn’t spell out exactly what he meant by “above inflation”, but even a 10 per cent increase would not restore its buying power to what it was before the onset of the current financial crisis in 2008.

The chancellor’s declaration was welcomed by TUC General Secretary Frances O’Grady, though she added, "But while this would help many, the chancellor should be more ambitious about achieving decent pay rises across the whole of the UK workforce.”

Such rotten thinking typifies the thoughtlessness of many in our unions. No good will come of asking chancellors to be “ambitious” about achieving pay rises. Their only desire is to make it easier for capitalists to make greater profits. We should be calling for an end to state intervention in wages, not for more of it.

More like a maximum

Why do people think the minimum wage is there to provide a safety net? Its real role is to help lower wage rates across the board. In many sectors of the economy, it functions as a maximum wage, with plenty of employers paying less.

The minimum wage currently stands at £6.31 an hour – slightly under half the average annual worker’s wage of £26,500. To put that in perspective, the chief executives of the top 100 companies listed on the London Stock Exchange averaged a take-home pay of £4.3 million in 2012, taking 24 hours to “earn” that average annual wage.

Who is pricing who out of a job? Who is bleeding companies dry? Politicians drone on about the need for “balance” in supporting their concept of recovery. The only balance on the scale of wages is brutally weighted towards the rich – the capitalists and their corporations.

Meanwhile, 1 per cent of the population pockets 10 per cent of national income paid, and 50 per cent of the population get 18 per cent – so much for balance.

The January edition of Workers looked at the “living wage” and trade union began to grapple with the wages question. But there is no need to invent entirely new answers. Two Marxist works written back in the 19th century clearly define wages and our fight for them: Karl Marx’s Wages, Price and Profits or Frederick Engels’s The Wages System – they deserve a read.

The living wage and the minimum wage are part of a system that subsidises employers. The various formulae used to arrive at the “living wage” or national minimum wage – and there are various versions – all factor into their calculation that the recipient of low wages will receive state benefits.

Without the state benefit element the real figure for the “London Living Wage” would be £10.80p not £8.80p (the level proposed for April 2014 ).

Effectively all workers who pay tax subsidise the incomes of the over 60 per cent in employment who have to have their low wages topped up by benefits.

The real subsidy

Workers whose pay is bolstered by state benefits because of the aptly described “in-work poverty” are subject to a further cruel con: the real subsidy is to the employer’s profits. The state pays that element which should come from the employer's pocket.

And, of course, while Osborne calls for rises in the minimum wage, he and his Treasury chums are attacking the level of benefits paid to those 60 per cent. Give with one hand, take with the other.

Workers should not be tolerating the laziness of our trade unions, which campaign for the “living wage” without bothering to determine what the rate for the job is – and rely upon the philanthropic generosity of companies making billions to toss a few scraps in our direction.

Such a mind-set denies the history and origins of our unions and further reinforces the alienation of members from their own organisations.

Why be in a trade union if you cannot influence or determine your own wages? Why be in a trade union if we are on our knees with the likes of Boris Johnson and his banker friends at Canary Wharf determining the pittance we earn? ■