The Miliband missile: the living wage

Before I delve into the topic, here’s a little bit of housekeeping. From now on I will be posting every Sunday, so keep an eye out for those slices of prosaic environmental discussion. Between each weekly post, if anything in the news catches my eye I’ll be sure to pop something up. Housekeeping: done.

I was starting to research a post on super storm Sandy when I saw a tweet from the Observer saying that this weekend Ed and David Miliband would be unveiling proposals to put the living wage at the heart of the Labour policy in the run up to the next general election. Sorry, Sandy, but I’m going to deprive you of yet more media coverage.

The living wage is defined as a wage needed to – and I apologise for the vagueness of this definition – “live comfortably”. Currently the wage stands at £8.30 per hour for those working in London and £7.20 for those toiling in the rest of the UK. In contrast, the current national minimum wage for those aged 21 and over is £6.19.

This living wage was not conceived at a The Thick of It New Age policy workshop, to be launched as a dual Miliband missile directed into the heart of the austerity-focused Coalition. It’s been a citizen campaign for over a decade. In fact, in May last year the Living Wage campaign celebrated it’s tenth birthday. Unfortunately, success has been limited. The 2010 Labour manifesto included a pledge to introduce the living wage for government workers in the capital, a number of Labour-led councils across the UK have taken on the initiative, and all members of the Greater London authority pay their on-site employees the London living wage.

Rush forward to this weekend and, first, David Miliband co-authored an Observer article outlining the benefits of the policy, in anticipation of the new living wage rate’s announcement on Monday morning. Then, his brother, in an interview with the Independent on Sunday, explained that a Labour government could introduce rules to ‘name and shame’ companies who don’t pay their staff the living wage. Either listed companies would be forced to sign up to a new set of corporate governance rules, central government would give preferential treatment to living wage employers, or firms would be incentivised by receiving money back from the Treasury. All this was timed perfectly to coincide with ‘Living Wage Week’, running from 4-11 November.

The first point to discuss is the very idea of the living wage. Economic theory implies that by forcing business to raise wages they will be forced to increase the cost of their products which is passed onto the consumer. However, by giving more money to consumers they can consume more, therefore boosting the economy. The feedback clearly goes both ways, and, in essence, the idea of a living wage is just a raising of the current minimal wage to an ethical level. In answer to the policy’s detractors, this isn’t going to restructure the British economy, just push it in a more ethical direction.

Is this part of David Miliband’s return to the political front line?

In an era of economic stagnation and activism such as the Occupy movement, the living wage is one step towards more sustainable, ethical capitalism. Frankly, as a young person, why the minimum wage is not already calculated using living wage standards baffles me. One study by accountants KPMG, as reported in this BBC piece, has shown that 1 in 5 workers are earning below that level.  In local government, 1 in 4 staff, over 200,000 workers, earn below the national living wage.

How and if the major political parties absorb the policy will be interesting to see. Ed Miliband in his IoS interview sees the living wage as a central tenet of his ‘One Nation’ vision. Quite what that ‘One Nation’ rhetoric means to an already left-leaning party, I’m not sure. However, if Labour holds the living wage high as a landmark policy heading into the next election, they might be able to secure the moniker of the ‘ethical party’. At its core is a principle that no one in our great country should be paid below a comfortable, fair rate, particularly when the top 1% are richer than ever before. That’s some powerful rhetoric that Labour could claim as their own.

Photographs: Living Wage Foundation and fotopedia.com

 

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