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How much would Miliband's living wage plans actually change?

"Naming and shaming" employers who don't pay the living wage is likely to have disappointing results.

Labour leader Ed Miliband. Photograph: Getty Images.
Ed Miliband is campaigning for companies to pay the living wage, currently £7.45 an hour. Photograph: Getty Images.

Labour says it would "name and shame" employers that don’t pay all their workers a living wage – the income a person needs to be able to afford a basic standard of living. But how shaming would inclusion on Miliband's list of offenders be? Employers on it wouldn’t exactly stand out: KPMG calculates that one in five UK workers are not paid a living wage, which stands at £7.45, or £8.55 in London.

That makes for safety in numbers, and with low wages heavily concentrated in certain sectors – 70 per cent of cleaners, waiters, and kitchen staff are paid less than the recommended rate – the competitors of affected companies would be even less likely to pay the wage, keeping the pressure to change low.

Miliband’s pledge recalls the strategy of anti-tax-avoidance protest group UK Uncut, which drew attention to high profile companies that avoided large sums of tax, in the hope of shaming them into paying more. The campaign succeeded in raising the issue up the political agenda – but corporate tax avoidance is still rife, and there have so far been no major public reversals by their targets: at the height of the protests last year, companies like Vodafone reported record profits, whilst spokespeople simply repeat that they are following the law.

One aim of UK Uncut was to urge politicians to act on the issue and change the law, but as a politician himself, Miliband’s approach to low pay seems somewhat confused. Low paid workers may well also ask why Labour needs to be in government to do what a small campaign group did with a Twitter account and a lot of time on their hands.

UK Uncut also had the advantage of focusing its fire on specific, high profile offenders. But if a Labour government were to target specific companies to get high-profile results, they'd be likely to fall foul of EU state aid regulations: governments are strictly forbidden from picking on certain companies, or offering an "advantage in any form whatsoever conferred on a selective basis to undertakings by national public authorities".

The "name and shame" approach could even be embarrassing for Labour, which doesn’t have a spotless record on the living wage itself. Relying on negative media coverage and civil society to do the job could end up with the party turning its fire on itself. The party’s longest serving living Prime Minister only recently signed up to paying his staff the bare minimum wage, and Tony Blair, among others, would be one of those shamed for not paying the living rate if the proposals were comprehensively implemented.

If Labour is serious about workers earning a living wage then it will probably find the results of its flirtation with business voluntarism disappointing. The actions of companies are ultimately guided by the profit motive and shareholder value, and recent history suggests that activism can rarely, by itself, create corporate social responsibility out of thin air.

14 comments

Attrition47's picture

Why do you bother to grace this fraudulent tosh with a report? Gussie Fink-Nottle is another tory in tory clothing.

JerryBear's picture

The 'new' working poor are a consequence of the last Labour Gov't in which the Millibands so enthusiastically served literally flooding the laour market with cheap overseas labour. They bought into the big business propoganda that "we can't get enough skills", deceitfully missing the real caveat, "at the lowest possible wage". And those who worked in the unskilled sector, cruelly labelled as part of Britain's 'work-shy'. What it was really all about was big business wanting to squeeze wage costs by getting the Labour Gov't to over supply workers. And as one Labour MP eventually admitted, an immigration policy also designed to "stick it to the Tories". It wasn't/isn't the fault of the migrants - they only took the opportunities made available to them. What was a below living wage for the indigenous British worker, was a highly paid wage to many newy arrived - no wonder they were better motivated & business knew it.

Now that it has all gone pear shaped, exactly how do the Millibands think they can name & shame the tens of thousands of businesses paying staff below a living wage ? Well they could start by naming & shaming the last Labour Gov't who created a new generation of working poor we now both see and feel. The Millibands are not part of the solution, they're part of the problem.

Amelia Amanda Anna 's picture

Raise the minimum wage to the living wage and make the whole thing legally obligatory. The result will be that the bosses of the cleaners and the bosses of the cooks and waiters will earn a bit less. Who would mind millionaire Gor__don Ra_ms_ey to earn a bit less if you know that the girl who does the dishes earns a living wage!!

emm bori's picture

o great does this mean that people earning more that the living wage will get a conscience and accept a lower wage and living standard so that community members may also join the living in being paid a wage - signed an unemployed zombie who is being skimmed by all the corrupt corporates so that they can support their families at the end of the day while continuing to be charged interest on a supposedly interest free loan on a debt it looks like i dont stand a chance of paying off because i dont stand a chance of ever getting a job because i never fit into the right category until this world is free from corruption

paul hackett, smith institute's picture

Three cheers for Ed for putting the spotlight on low pay (real wages have been falling for a decade) and the widening wage divide (which is pushing more people into in-work poverty). Two cheers for backing the 'living wage', which is starting to take off and could have a multiplier effect across the private sector if included as (fair wages) clauses in procurement contracts. But only one cheer for failing to acknowledge the role that unions and collective bargaining plays in improving pay rates. If Labour promises a better deal for low wage workers and wants the state to do less of the heavy lifting (via tax and benefits) then more must be done to rebalance the power relationship at work, which more than ever favours the employer. Volunteerism won't do it. Time for new social contract with teeth? Paul Hackett, Director, Smith Institute

Forlornehope1's picture

Those large companies that like to pride themselves on business ethics, the ones that sign up to environmental targets and support the Prince's Trust, will come into line very smartly, if they have not done so already. They are however a very small minority and the kind of contractors who provide cleaning services and labour for agricultural work will not give a stuff about being "named and shamed"; they might even regard it as a guarantee of their competitiveness.

Lucidus's picture

Jon,

You haven't mentioned the public sector and procurement at all.

If public sector bodies checked that all their employees were on the Living Wage then perhaps a few hundred thousand people would be better off.

If the same bodies looked at their outsourced activities (such as cleaning staff) and made it a condition of tender that the Living Wage is paid, then many more would benefit.

Jon S's picture

That approach is more likely to actually deliver results, yes - the one criticised in the piece isn't.

Lucidus's picture

So it's rather vacuous to characterise Labour's policy as being exhortation-only, when it clearly isn't.

Jon S's picture

If it makes you less upset, I didn't pick the title - if you read the piece without the title its more obvious that its a straight criticism of the voluntary private sector element.

Though to be fair to the editor, the number of firms that work as government contractors is small in comparison to the entire rest of the private sector economy anyway.

Obi Wan Kenobi's picture

Ed if you're going to name and shame companies for not paying a basic living wage, then you MUST do it to ALL OF THEM - OR IT MEANS NOTHING.

I love this idea, stick it to them, the firms are making loads of profit, about time the small guy saw some benefit.

Indu Pendent's picture

For a single person early on in their career living ion rough digs and someone in their 40's with 5 kids, 3 nintendo's and meat twice a week, the living wage --- and their expectations --- at totally different. So will it be a blanket policy of name and shame?

Rather than naming and shaming employers why not just shut down the evil bastard employers (fancy being so wicked as to create jobs for people in a difficult economy) and everyone can then live off the State in State jobs? What, you mean Gordon tried that already with his fatwa against SMEs?

Jon S's picture

I don't really disagree with this at all, I suppose part of the point of this piece is that the idea seems poorly scrutinised and thought through

Barrie J's picture

Spot on.
Better to harrass the government over giving the 'regulators' some teeth and prising them out of the comfortable position they occupy in the pockets of those companies/bodies they are supposed to be regulating.
OFTEL
OFWAT
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etc., ad nauseam.

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