Living wage: Ed Miliband pledge over government contracts

 

Ed Miliband: "Above and beyond the minimum wage we need to do more"

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Ed Miliband has unveiled plans to deliver a "living wage" of at least £7.45 per hour for millions of people, if Labour wins the next election.

Whitehall contracts would only go to firms paying the living wage, while those who paid less could be "named and shamed", said the Labour leader.

His speech came at the start of a week of events promoting the idea.

Downing Street backed firms paying a living wage, but said restricting contracts in this way could be illegal.

Others backing the wage include the Scottish government, which says all staff will get the living wage, and London's mayor, who said it made economic sense.

The living wage - which is £7.45 per hour across the UK except for London where it is £8.55 per hour - does not have any legal force, but is part of a campaign by the Living Wage Foundation and Citizens UK.

It is considerably higher than the official minimum wage that employers must legally pay, which stands at £6.19 per hour for those over 21, £4.98 for those over 18, and £3.68 for 16 and 17-year-olds.

As part of its policy review Labour is looking at ways of making the living wage the new norm, including naming and shaming companies who do not pay the wage and introducing rules forcing government contracts to only be given to those firms who pay it.

Number 10 said the government backed a living wage and "would encourage business to take it up" but warned Labour's plans to restrict government contracts in this way could breach EU procurement law.

Mr Miliband said this was "completely ridiculous" because local councils were already showing it could be done.

What is the living wage and how is it calculated?

  • The living wage is calculated to reflect the basic cost of living and is based on the principle that work should pay enough to provide for the essentials of life.
  • It is part of a campaign led by the Living Wage Foundation and Citizens UK.
  • It is an entirely voluntary scheme for employers and the wage is updated every year.
  • The Centre for Research in Social Policy at Loughborough University calculates the rate for workers outside London. The Greater London Authority calculates the rate for those in the capital.
  • The latest annual calculation saw the wage rise by 25p from £7.20 to £7.45 for those outside London and from £8.30 to £8.55 for those in London.
  • Living wage employers are expected to implement the new rate as soon as possible, and within 6 months of the announced rise.

During his speech, Mr Miliband said: "Just as in the 1990s, the minimum wage was a signature achievement of the last Labour government.

"So in the coming years, the living wage will be central to our work.

"We need to build an economy where everyone has a stake.

"Not where millions of people feel they never have a chance for a decent life however hard they work."

Employers who have voluntarily committed to pay the living wage are expected to start paying the new higher rate within six months of the announced rise.

The Scottish government, which has been paying directly employed staff the living wage since last year, has announced it will implement the rise from April 2013. This will benefit up to 3,300 workers, it said.

Speaking at the launch of the increased London rate, Mayor of London Boris Johnson said paying the wage made "economic sense" for the city by giving employees more spending power.

'Sharing fairly'

He said: "By building motivated, dedicated workforces, the living wage helps businesses to boost the bottom line and ensures that hard-working people who contribute to London's success can enjoy a decent standard of living."

Marlene Brownlee Marlene Brownlee, a cleaner with Newcastle City Council, thinks she will be £70 a week better off

If everyone was paid the living wage, the Institute for Fiscal Studies estimates, the Treasury would save £1,000 a year for every person from less spending on tax credits and from increased tax revenue.

Barclays is one of a number of major companies already paying the living wage while 19 local authorities have been accredited as "living wage employers", including Newcastle City Council.

One of those benefiting is cleaner Marlene Brownlee, who has worked at Newcastle's civic centre for 15 years and estimates she will be about £70 a week better off.

She said: "It'll make a big difference... that little bit extra - well I'm saying little, it's a lot really - is excellent, for me and everybody else at the council."

Mr Miliband unveiled the new policy at Islington Council in London, which recently became another "living wage employer".

He said: "There are almost five million people in Britain who aren't earning the living wage; people who got up early this morning, spent hours getting to work - who are putting in all the effort they can - but who often don't get paid enough to look after their families, to heat their homes, feed their kids, care for elderly relatives and plan for the future.

"Too many people in Britain are doing the right thing and doing their bit, helping to build the prosperity on which our country depends, but aren't sharing fairly in the rewards."

 

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  • rate this
    -2

    Comment number 53.

    This is just union closed-shop activity through the back door, which will lead to a denial of job opportunities and career entry for millions of our most vulnerable. If we cared about the poor, we would say "no" to the unions and to the minimum wage full stop. People are stagnating on welfare because the unions have driven the minimum wage. It's wrong, and it has to stop.

  • rate this
    +2

    Comment number 52.

    Realistically the people setting the minimum wage figure, probably have been fortunate enough in their life as to have never to have experienced what it is like to live off these amounts, especially if they are in the millions of workers who can only work 'part time' which makes the stated drop in unemployed figures not accurate.

  • rate this
    +1

    Comment number 51.

  • rate this
    +1

    Comment number 50.

    @15 Bankskank

    I have an idea. Why don't small business owners that profit whilst paying its worker peanuts move to China where that sort of stuff is acceptable.

    OR

    You could drag yourself out of the third world mindset and pay a fair wage. If not, then I really don't care what happens to your business. Not my problem, It's the greedy business owners.

  • rate this
    -1

    Comment number 49.

    Capitalism only works in a closed market. But we're a global economy now. Just as companies can source cheap labour from abroad, so too can we buy cheaper goods from abroad. When our government finally wakes up to this, then we'll see our cost of living start to come down more in line with other countries.

  • rate this
    +33

    Comment number 48.

    The Benefit bill is steadily climbing & we can’t afford for this to continue.
    People who support austerity can’t be against the principle of a living wage; the tax payer has subsidised businesses for too long.

  • rate this
    0

    Comment number 47.

    The idea of work is to be able to earn money to live on. Therefore a full time job should provide enough to live a certain standard without requiring handouts from government. Maybe they would also split the minimum wage into unskilled and skilled, so that people that are skilled in a particular job role are not made to work for the current minimum wage by unscrupulous employers.

  • rate this
    -15

    Comment number 46.

    We should abolish the Minimum Wage without delay. I'm not sure if any political party still proposes it (I think Greens did once), but what we should have is a Basic Citizen Allowance to replace unemployment benefit and small income tax allowances. It would cost the state no more, slash bureaucracy and promote short-term and casual employment - vital to startups.

  • rate this
    -22

    Comment number 45.

    Lets make Govt use the more expensive employers, costing all taxpayers more, & name & shame employers who employ, within the law, but below this arbitrary "living wage"?

    We need to axe the minimum wage to allow the unskilled to enter the workforce.

    Wage controls didn't work in the USSR, they sure as hell wont work here. Maybe if No.10 didn't do so much QE & taxing we'd all be better off.

  • rate this
    0

    Comment number 44.

    Nice try Milibean so what will happen ? Companies will either pass on the costs to the consumer, cue rampant inflation ... in which case the 'living wage' will quickly become an unliving wage. Or go bust or outsource the work to countries with cheaper labour costs. Cue higher unemployment. Wouldn't it be nice if politicians thought outside the box for a change ?

  • rate this
    +1

    Comment number 43.

    If the lowest rate of pay is £7.45 (£14,527.50 pa) then other wages in the organisation for more senior specialised or skilled jobs may have to be recalibrated resulting in a wage inflation hike at the time this is introduced. I would support this measure if it was phased in but a word of warning our wages are already significantly higher than SE Asia, Africa the US and other competitive markets

  • Comment number 42.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    +3

    Comment number 41.

    Why doesn't he just rause the minimum wage? It seems a lot more effective way than trying to morally blackmail firms into doing it

  • Comment number 40.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • rate this
    0

    Comment number 39.

    On lunchtime news, public sector councils were backing it, so that means more public expenditure, where do they think the money will come from? Oh yes the 18 million private sector workers who's taxes pay for Whitehall economic profligacy. Ed's electioneering to his core vote of lemmings - not an ounce of common sense, the pusuit of power at all costs. You can't spend what you don't have

  • rate this
    +34

    Comment number 38.

    We have to make it pay to work and come off benefits one way or another. I support raising the tax threshold that people start paying tax to £12,000 - more money in everyone's pockets (even the better off). We would then have more to spend and companies would make more profit to pay better wages. Sort out the tax loopholes and stop companies dodging tax and we could afford this and a living wage

  • rate this
    +54

    Comment number 37.

    Instead of this sort of rubbish why not raise the tax thresholds so that someone on minimum wage pays zero tax and NI. That would give them an instant 30% wage rise.

  • rate this
    +2

    Comment number 36.

    Naming and shaming small business's is not the answer while the big business's can afford it and also get away with fraud through tax.
    The more you earn the more tax you pay and no state benefit to help with increasing costs of living.
    The Problem is the same with the Banks too big to fail and getting away with fraud and Tax havens, start from the Top - Down is needed very desperately for Votes

  • rate this
    +1

    Comment number 35.

    What if I want to work for less than the living wage?

    The labour market is meant to be competitive, I'd much rather I could take advantage of being willing to work for less to get a job than be out of one altogether.

    Looking from an economic point of view, naturally companies will seek to reduce their labour force if forced to pay higher wages, or will move jobs overseas.

  • rate this
    +2

    Comment number 34.

    Remember the Tory hysteria about the Minimum Wage? None of it was based on any founded research- just goes to show the difference between the two Parties:Labour looking at the well-being of the low paid- the Tories giving tax cuts to the millionaires. Tories want to push people into poverty- Labour want to spread equality in the One-Nation.Tories imposing sanctions on the most vulnerable.

 

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