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. 

Photo: Getty
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Saudi Arabia is a brutal and extremist dictatorship – so why are we selling it arms?

With conflict in Yemen continuing, it’s clear that we’re failing to moderate the actions of “our despots”.

This year, during Pride week, I noticed something curious on top of the Ministry of Defence just off Whitehall. At the tip of the building’s flagpole hung the rainbow flag – a symbol of liberation for LGBTIQ people and, traditionally, a sign of defiance, too.

I was delighted to see it, and yet it also struck me as surprising that the governmental headquarters of our military would fly such a flag. Not only because of the forces’ history of homophobia, but more strikingly to me because of the closeness of our military establishment to regimes such as Saudi Arabia, where homosexuality is a sin punishable by jail, lashing and even death

That relationship has been under the spotlight recently. Ministers writhed and squirmed to avoid making public a report that’s widely expected to reveal that funding for extremism in Britain has come from Saudi Arabia. The pressure peaked last week, after a series of parliamentary questions I tabled, when survivors of 9/11 wrote to Theresa May asking her to make the report public. At the final PMQs of the parliamentary term last week, I again pressed May on the issue, but like so many prime ministers before her, she brushed aside my questioning on the link between British arms sales and the refusal to expose information that might embarrass the Riyadh regime. 

The British government’s cosy relationship with Riyadh and our habit of selling weapons to authoritarian regimes is “justified" in a number of ways. Firstly, ministers like to repeat familiar lines about protecting British industry, suggesting that the military industrial complex is central to our country’s economic success.

It is true to say that we make a lot of money from selling weapons to Saudi Arabia – indeed figures released over the weekend by the Campaign Against Arms Trade revealed that the government authorised exports including £263m-worth of combat aircraft components to the Saudi air force, and £4m of bombs and missiles in the six months from October 2016.

Though those numbers are high, arms exports is not a jobs-rich industry and only 0.2 per cent of the British workforce is actually employed in the sector. And let’s just be clear – there simply is no moral justification for employing people to build bombs which are likely to be used to slaughter civilians. 

Ministers also justify friendship and arms sales to dictators as part of a foreign policy strategy. They may be despots, but they are “our despots”. The truth, however, is that such deals simply aren’t necessary for a relationship of equals. As my colleague Baroness Jones said recently in the House of Lords:

"As a politician, I understand that we sometimes have to work with some very unpleasant people and we have to sit down with them and negotiate with them. We might loathe them, but we have to keep a dialogue going. However, we do not have to sell them arms. Saudi Arabia is a brutal dictatorship. It is one of the world’s worst Governments in terms of human rights abuses. We should not be selling it arms.”

With Saudi Arabia’s offensive against targets in Yemen continuing, and with UN experts saying the attacks are breaching international law, it’s clear that we’re failing to moderate the actions of "our despots".

The government’s intransigence on this issue – despite the overwhelming moral argument – is astonishing. But it appears that the tide may be turning. In a recent survey, a significant majority of the public backed a ban on arms sales to Saudi Arabia and just this weekend the Mayor of London denounced the arms fair planned in the capital later this year. When the government refused to make the terror funding report public, there was near-universal condemnation from the opposition parties. On this issue, like so many others, the Tories are increasingly isolated and potentially weak.

Read more: How did the High Court decide weapon sales to Saudi Arabia are lawful?

The arms industry exists at the nexus between our country’s industrial and foreign policies. To change course we need to accept a different direction in both policy areas. That’s why I believe that we should accompany the end of arms exports to repressive regimes with a 21st century industrial policy which turns jobs in the industry into employment for the future. Imagine if the expertise of those currently building components for Saudi weaponry was turned towards finding solutions for the greatest foreign policy challenge we face: climate change. 

The future of the British military industrial establishment’s iron grip over government is now in question, and the answers we find will define this country for a generation. Do we stamp our influence on the world by putting our arm around the head-choppers of Riyadh and elsewhere, or do we forge a genuinely independent foreign policy that projects peace around the world – and puts the safety of British people at its core?

Caroline Lucas is the MP for Brighton Pavilion.