Where next for the living wage?

Progress on low pay is imperative.

Tomorrow marks the start of the first Living Wage week. It is tangible proof that, 11 years after a small broad-based East London community alliance revived an idea first forged in the industrial heartlands of 1870s Britain, momentum for increased living wage coverage continues to gather pace.

And with good reason: at a time when powerful forces are bearing down on wages at the bottom end of the labour market, living wage campaigns have delivered tangible gains for thousands of low-paid workers. More widely, living wage initiatives have served as a powerful rallying cry against endemic levels of low-paid work, highlighting the power of social norms in challenging a low-pay, low-productivity economic model that is anything but pre-determined. 
 
Yet for all the success of the living wage campaign relatively few workers have secured a higher wage as a result of a living wage initiative. For example, there are an estimated 651,953 workers in London earning less than the London Living Wage, yet only around 10,341 London workers won a living wage in the six years between 2005 and 2011. This is not a cry of despair, simply a call for realism about the role that living wage initiatives can play in tackling our reliance on an extensive pool of low-paid labour and for targeting efforts where they will be most effective.  
 
Of course, the latter would be far easier if there was greater transparency around low-paid work. There is therefore a powerful case for amending the UK Corporate Governance Code to require listed companies to report on how many of their employees receive less then a living wage – as called for in the final report of the Resolution Foundation’s Commission on Living Standards. At a stroke such a move would begin to alter our tolerance of endemic levels of low pay, laying the ground for further gains. 
 
And we know that further progress is possible. Our estimates suggest that for large private sector companies in key sectors like banking, construction, food production and communications – where roughly a million people in total work below living wage rates – the costs of paying a living wage for all directly-employed staff are affordable at around 1 per cent of the firm’s wage bills. 
 
Of course, different companies will be better able to absorb these costs than others and the introduction of a living wage pay floor will be more challenging for companies in the major low-wage retail sectors (increases in wage bills of between 4.7 and 6.2 percentage points) but progress is still possible.
 
It is also imperative given the growing awareness that the public purse can no longer sustain the high cost of the UK’s reliance on 5 million workers – 1 in 5 employees – who earn above the legal minimum but below a living wage. It is not just low-paid workers and their families that bear the cost of low-paid work on this scale in strained budgets and diminished life chances. Taxpayers also pay to the tune of around £4 billion a year in in-work support for low earners. 
 
With few, if any, believing that the growth in tax credit support that occurred over the past decade can be repeated in these fiscally straitened times there is an urgent need to start developing an ambitious policy agenda to tackle low pay at source. For any policymaker serious about doing so living wages are an integral, if only partial, part of the solution. 
 
But there is a very real need to start matching words with deeds. Over the past decade politicians from across the political spectrum have competed to associate themselves with the idea of the living wage, safe in the knowledge that the voluntary nature of living wage agreements and their partial coverage made doing so almost consequence-free. With the role, rationale, strengths, limitations and policy potential of living wages now under increased scrutiny the window for endorsement devoid of decision is beginning to close. 
 
The transition from approval of living wage initiatives to concrete policy ideas to support their proliferation will not be easy. Yet there is a path for policymakers between inaction and reaching for a legislative solution in the form of a statutory living wage which few living wage advocates would endorse. That path not only involves fostering greater transparency around low pay but also thinking about the use of central and local government’s purchasing power and how the notional savings in state support that would accrue from more extensive living wage coverage might be used to help firms transition to better business models. None of this will be simple. But the alternative of not matching words with deeds is no longer a justifiable option at a time when we need wages to do far more of the heavy lifting if the living standards of low earners are not to decline rapidly. 
 
Matthew Pennycook is senior research and policy analyst at the Resolution Foundation
A street cleaner passes the Jobcentre Plus office in Bath (Photo: Getty Images)

Matthew Pennycook is MP for Greenwich and Woolwich, and member of the Energy and Climate Change Committee. He is PPS to John Healey. 

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Four times Owen Smith has made sexist comments

The Labour MP for Pontypridd and Jeremy Corbyn’s Labour leadership rival has been accused of misogynist remarks. Again.

2016

Wanting to “smash” Theresa May “back on her heels”

During a speech at a campaign event, Owen Smith blithely deployed some aggressive imagery about attacking the new Prime Minister. In doing so, he included the tired sexist trope beloved of the right wing press about Theresa May’s shoes – her “kitten heels” have long been a fascination of certain tabloids:

“I’ll be honest with you, it pained me that we didn’t have the strength and the power and the vitality to smash her back on her heels and argue that these our values, these are our people, this is our language that they are seeking to steal.”

When called out on his comments by Sky’s Sophy Ridge, Smith doubled down:

“They love a bit of rhetoric, don’t they? We need a bit more robust rhetoric in our politics, I’m very much in favour of that. You’ll be getting that from me, and I absolutely stand by those comments. It’s rhetoric, of course. I don’t literally want to smash Theresa May back, just to be clear. I’m not advocating violence in any way, shape or form.”

Your mole dug around to see whether this is a common phrase, but all it could find was “set back on one’s heels”, which simply means to be shocked by something. Nothing to do with “smashing”, and anyway, Smith, or somebody on his team, should be aware that invoking May’s “heels” is lazy sexism at best, and calling on your party to “smash” a woman (particularly when you’ve been in trouble for comments about violence against women before – see below) is more than casual misogyny.

Arguing that misogyny in Labour didn’t exist before Jeremy Corbyn

Smith recently told BBC News that the party’s nastier side only appeared nine months ago:

“I think Jeremy should take a little more responsibility for what’s going on in the Labour party. After all, we didn’t have this sort of abuse and intolerance, misogyny, antisemitism in the Labour party before Jeremy Corbyn became the leader.”

Luckily for Smith, he had never experienced misogyny in his party until the moment it became politically useful to him… Or perhaps, not being the prime target, he simply wasn’t paying enough attention before then?

2015

Telling Leanne Wood she was only invited on TV because of her “gender”

Before a general election TV debate for ITV Wales last year, Smith was caught on camera telling the Plaid Cymru leader that she only appeared on Question Time because she is a woman:

Wood: “Have you ever done Question Time, Owen?”

Smith: “Nope, they keep putting you on instead.”

Wood: “I think with party balance there’d be other people they’d be putting on instead of you, wouldn’t they, rather than me?”

Smith: “I think it helps. I think your gender helps as well.”

Wood: “Yeah.”

2010

Comparing the Lib Dems’ experience of coalition to domestic violence

In a tasteless analogy, Smith wrote this for WalesHome in the first year of the Tory/Lib Dem coalition:

“The Lib Dem dowry of a maybe-referendum on AV [the alternative vote system] will seem neither adequate reward nor sufficient defence when the Tories confess their taste for domestic violence on our schools, hospitals and welfare provision.

“Surely, the Liberals will file for divorce as soon as the bruises start to show through the make-up?”

But never fear! He did eventually issue a non-apology for his offensive comments, with the classic use of “if”:

“I apologise if anyone has been offended by the metaphorical reference in this article, which I will now be editing. The reference was in a phrase describing today's Tory and Liberal cuts to domestic spending on schools and welfare as metaphorical ‘domestic violence’.”

***

A one-off sexist gaffe is bad enough in a wannabe future Labour leader. But your mole sniffs a worrying pattern in this list that suggests Smith doesn’t have a huge amount of respect for women, when it comes to political rhetoric at least. And it won’t do him any electoral favours either – it makes his condemnation of Corbynite nastiness ring rather hollow.

I'm a mole, innit.