Tuesday, 2 April 2013

National Minimum Wage

"There should be a statutory level beneath which pay should not fall - with the minimum wage decided not on the basis of a rigid formula but according to the economic circumstances of the time and with the advice of an independent low pay commission, whose membership will include representatives of employers, including small business, and employees"
This was the promise as made in the Labour parties manifesto in 1997 to set up a National Minimum Wage Act (1998). It also said that:

"There must be minimum standards for the individual at work, including a minimum wage, within a flexible labour market. We need a sensible balance in industrial relations law - rights and duties go together."

The current level is below what independent sources call the living wage. But thanks to the increase in teh Income Tax personal threshold the wage is going further now than it ever did, indeed the Liberal Democrats have said they want to see the basic rate rise to match a full time minimum wage.

So therefore the talk earlier today that the minimum wage could be cut obviously led to a lot of  uproar and outrage. Until that is Number 10 were forced into making a statement saying it will not be cut.

So everything is rosy then?

Well not necessarily. Remember that promise that it will be set by an independent body. Well The Daily Telegraph said, "the Low Pay Commission which sets the wage has been told formally by ministers to consider the impact on “employment and the economy”, before agreeing future increases." So the possibility is there for a freeze.

However, considering that even the lowest paid civil servants are not subject to a pay freeze why are those that are earning even less going to be faced with the possibility? Inflation still exists. Therefore a freeze in the minimum wage means that those who are on it will be hit. It is already unfair that they are taxed on their minimum wage, but to then not link that wage to inflation is also unfair (even with the increase in personal allowance to £10,000 next April).

But while Labour did said that the minimum wage is not a fixed formula, it does have to fit into that model of rights and duties  forming a sensible balance in industrial relations law. So therefore is the pressure, if indeed it is pressure that the cabinet is placing on the Low Pay Commission as they renegotiate its remit to consider the impact on employment and economy should not be at the detriment of the employee.

If George Osborne is seen as giving with one hand with the personal allowance increase while at the other taking away with substantially sub inflationary increases in the minimum wage there really will be righteous anger. Of course the Conservatives opposed the National Minimum Wage in the first instance, but the Lib Dems who are their coalition partners were in favour and are looking to make it a better wage for those who are on it with our fairer tax promises. So I hope that they will wind in the worse aspects of these discussions with the Low Pay Commission.

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