A living wage alone won't stop runaway inequality

As well as boosting pay for low earners, we need to tackle excessive pay at the top.

It is encouraging to see a growing number of businesses and local authorities adopting the living wage and this week's piece by Jeremy Warner, assistant editor of the Daily Telegraph, is proof that the movement has reached far and wide. In his article, Warner considers the adverse effects of low pay but, more importantly, identifies that pay levels are threatening to become more about PR than social justice.

For example, some of the living wage’s most prominent private sector advocates (KPMG, Barclays, HSBC) are unlikely to have a significant number of low-paid staff who would benefit from the policy and many cleaning and catering jobs are still outsourced. Only when we see organisations with large numbers of low-paid staff implementing the living wage will we know that the movement has truly arrived.

Warner also touches on a problem highlighted by the TUC last year: that an increasing proportion of companies’ money is going to profits, rather than wages. And it seems that the shift from wages to profits is hurting those at the bottom of the income scale much more than those at the top.

We cannot ignore the fact that some Goldman Sachs staff (the subject of Warner’s article) are still set to receive average bonus payments of £250,000. This reflects the findings of last year’s Incomes Data Services Directors’ Pay Report, which showed that the average wage rise for FTSE 100 directors was 27 per cent in 2011. With bank bonus season nearly upon us, there are undoubtedly more stories of astronomical rewards in the financial sector to come.

Meanwhile, at the other end of the income scale, the majority are feeling the effects of real-terms reductions in take-home pay (with 2012 seeing an increase in national average earnings of just 1.6 per cent on 2011). The consequent lack of demand does not bode well for the long term health of the economy and, as an increasing number of academics and commentators have illustrated, it is in fact inequality of income  rather than low pay alone, that leads to so many of the economic and social ills we associate with poverty.

It would be naïve, then, to think that we can negate the effects of income inequality merely by promoting policies like the living wage while turning a blind eye to runaway high pay. In order to tackle the negative effects of income inequality, the welcome enthusiasm to promote the living wage must be met with a willingness to tackle pay at the top.

A protestor marches down Market Street during a day of action in support of the Occupy Wall Street movement on December 2, 2011 in San Francisco, California. Photograph: Getty Images.

John Wood is policy and campaigns officer at One Society

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Leader: Boris Johnson, a liar and a charlatan

The Foreign Secretary demeans a great office of state with his carelessness and posturing. 

Boris Johnson is a liar, a charlatan and a narcissist. In 1988, when he was a reporter at the Times, he fabricated a quotation from his godfather, an eminent historian, which duly appeared in a news story on the front page. He was sacked. (We might pause here to acknowledge the advantage to a young journalist of having a godfather whose opinions were deemed worthy of appearing in a national newspaper.) Three decades later, his character has not improved.

On 17 September, Mr Johnson wrote a lengthy, hyperbolic article for the Daily Telegraph laying out his “vision” for Brexit – in terms calculated to provoke and undermine the Prime Minister (who was scheduled to give a speech on Brexit in Florence, Italy, as we went to press). Extracts of his “article”, which reads more like a speech, appeared while a terror suspect was on the loose and the country’s threat level was at “critical”, leading the Scottish Conservative leader, Ruth Davidson, to remark: “On the day of a terror attack where Britons were maimed, just hours after the threat level is raised, our only thoughts should be on service.”

Three other facets of this story are noteworthy. First, the article was published alongside other pieces echoing and praising its conclusions, indicating that the Telegraph is now operating as a subsidiary of the Johnson for PM campaign. Second, Theresa May did not respond by immediately sacking her disloyal Foreign Secretary – a measure of how much the botched election campaign has weakened her authority. Finally, it is remarkable that Mr Johnson’s article repeated the most egregious – and most effective – lie of the EU referendum campaign. “Once we have settled our accounts, we will take back control of roughly £350m per week,” the Foreign Secretary claimed. “It would be a fine thing, as many of us have pointed out, if a lot of that money went on the NHS.”

This was the promise of Brexit laid out by the official Vote Leave team: we send £350m to Brussels, and after leaving the EU, that money can be spent on public services. Yet the £350m figure includes the rebate secured by Margaret Thatcher – so just under a third of the sum never leaves the country. Also, any plausible deal will involve paying significant amounts to the EU budget in return for continued participation in science and security agreements. To continue to invoke this figure is shameless. That is not a partisan sentiment: the head of the UK Statistics Authority, Sir David Norgrove, denounced Mr Johnson’s “clear misuse of official statistics”.

In the days that followed, the chief strategist of Vote Leave, Dominic Cummings – who, as Simon Heffer writes in this week's New Statesman, is widely suspected of involvement in Mr Johnson’s article – added his voice. Brexit was a “shambles” so far, he claimed, because of the ineptitude of the civil service and the government’s decision to invoke Article 50 before outlining its own detailed demands.

There is a fine Yiddish word to describe this – chutzpah. Mr Johnson, like all the other senior members of Vote Leave in parliament, voted to trigger Article 50 in March. If he and his allies had concerns about this process, the time to speak up was then.

It has been clear for some time that Mr Johnson has no ideological attachment to Brexit. (During the referendum campaign, he wrote articles arguing both the Leave and Remain case, before deciding which one to publish – in the Telegraph, naturally.) However, every day brings fresh evidence that he and his allies are not interested in the tough, detailed negotiations required for such an epic undertaking. They will brush aside any concerns about our readiness for such a huge challenge by insisting that Brexit would be a success if only they were in charge of it.

This is unlikely. Constant reports emerge of how lightly Mr Johnson treats his current role. At a summit aiming to tackle the grotesque humanitarian crisis in Yemen, he is said to have astounded diplomats by joking: “With friends like these, who needs Yemenis?” The Foreign Secretary demeans a great office of state with his carelessness and posturing. By extension, he demeans our politics. 

This article first appeared in the 21 September 2017 issue of the New Statesman, The revenge of the left