The introduction of the National Minimum Wage was one of Labour’s great policy successes – it boosted pay at the bottom without leading to a loss of jobs, and has wide industry support as a result.
But the National Minimum Wage was designed to prevent exploitation and extreme low wages. Today, the challenge is the large number of people that do a hard day’s work but are still living in poverty or dependent on in-work benefits: over 5 million people, or 1 in 5 employees, are low paid, and poor enforcement in some sectors means that more than a quarter of a million people are still estimated to earn less than the legal minimum.
This problem has been building for years, and no one government is responsible. But things have got worse in recent years. Families are on average £1,600 a year worse off since 2010 and the value of the national minimum wage has declined by 5% over the same period.
In September 2013, Ed Miliband announced that the next Labour Government would strengthen the minimum wage as one part of a plan to ensure that those who do a hard day’s work are rewarded for doing so. He asked Alan Buckle, former Deputy Chairman at KPMG International, to investigate how to restore the value of the minimum wage, ensure that where sectors can afford to pay more, they do, and promote the Living Wage.
The independent report by Alan Buckle, published in May 2014, argues that the framework that governs how the minimum wage is set must change dramatically, as part of a national mission to tackle low pay and build an economy with fewer low skill, low paid jobs and more high skill, high paid jobs.
The report argues that the minimum wage must evolve to address the new, broader problem of low pay that faces us today, not simply extreme exploitation. It calls for an ambitious target to increase the minimum wage over the course of a Parliament, ensuring that there is a bond between the wealth we earn as a nation and the wages that people earn for a hard day’s work.
You can download the report here and let us know your thoughts on the right hand side.