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
    0

    Comment number 33.

    This guy is worse than Tony Blair, lets name and shame the companies not paying the living wage??? Couldn't the government just increase the national minimum wage?

    He will tell you anything to get into power and then run the country into the ground some more!

  • rate this
    0

    Comment number 32.

    Once again Ed jumps on whatever polkitical bandwagon he thinks will garner votes - sheer populist opportunism, with no thought for the economics involved; bit like last week's EU vote in the Commons. At least the Tory rebels were voting on a point of principle. He's at it again with the 'living wage' idea. It seems popular so adopt it for the time being. Stop playing silly games Ed, and grow up!

  • rate this
    +24

    Comment number 31.

    1. Companies pat "living" wage to employees
    2. Companies put up prices to compensate
    3. Employees pay more for their goods
    4. "Living" wage buying-power back to square one

    Anyone else see a problem?

  • rate this
    +4

    Comment number 30.

    The trouble is that employers see the minimum wage as all that they need to pay. My partner worked for years operating plant machinery. He had to train to use the equipment, then pay to take qualifications & was skilled at what he did. He gave it up when he was only offered the same min wage that unskilled labourers were offered - the same as any unskilled worker anywhere was being paid.

  • rate this
    0

    Comment number 29.

    Labour has really got this right. I am suffering too on too low a wage to support myself. But aren't people worried that this wage increase will further entice immigration leaving thousands more in an ever expanding population unemployed. Youth unemployment has ruined my town already.

    http://running-jump.com/2012/11/05/what-happened-to-the-newbury-that-i-used-to-know/

  • rate this
    +1

    Comment number 28.

    Yeah, make it employers' responsibility to give people a better life, when it is entirely the fault of the gov't for unjustifiably high taxes on everything we eat, drink or wipe our backsides with.
    Taxation is fine, as long as it is spent on the things it's intended for. Not for propping up deficites in other areas where the gov't screwed up. Employers are not to blame, why punish them?

  • rate this
    +4

    Comment number 27.

    Can we please stop patronising people and stop the patch-up policies left right and centre. Close tax loopholes and especially for big corporations.
    And I am putting my own pebble by letting certain corporations know why I am siezing to buy from them. I had enough of being treated by a cash cow by governments and some of the corporates.
    The British public deserves better.

  • rate this
    +12

    Comment number 26.

    15.
    bankskank

    "
    Hey I have an idea, why don't we make it even more difficult for small businesses to operate."

    I have another idea , stop subsidising low wage paying small business owners with taxpayers money.

  • rate this
    +3

    Comment number 25.

    Simple facts. The minimum wage did not increase unemployment or living costs. It actually increased employment and peoples livings standards got better.

    If the UK can afford top level pay and a tax cut for the rich it can afford a living wage.The amount of profits made by companies not paying Corporate taxes in the UK shows many companies can afford it.
    Any politician against will lose votes.

  • rate this
    +1

    Comment number 24.

    To allow the Labour Party,which is very good at spending other peoples money wastefully,to interfere in business in this way will be a disaster.

  • rate this
    +5

    Comment number 23.

    How about just making sure people who work get more than people who don't or won't?

  • rate this
    +2

    Comment number 22.

    Even a living wage will only guarantee a decent standard of living if it comes with a full time job! If you are looking for work, you know how may part time or zero hours job are out there; and they won't even let you combine two of them to make a living, as everybody expects you to be available 24/7. Give me a full time job, even at NMW - and I might have a chance to survive, never mind "live"...

  • rate this
    +58

    Comment number 21.

    i earn £8.30 an hour, and unless you nearly kill yourself doing overtime it isnt enough to live on so i dont know how they expect people to be able to live on £7.45 an hour

  • rate this
    0

    Comment number 20.

    give it a few years and it will be the new lowest wage - again - everything will go up in value if everyone starts earning this much.

    The problem is not what the poorest earn to survive but what the rich think they are entitled too and seem to be getting more of

  • rate this
    +6

    Comment number 19.

    I live in Cardiff where £6 per hour (£960 pcm) is plenty to live off. £400 pcm will get you a comfortable room in a house inclusive of all bills. How do they calculate this? Does it include a holiday fund?

  • rate this
    +2

    Comment number 18.

    Sounds good in theory, but it won't work in practice. The cost of goods will go up to pay for the increase, and the living wage would have to be even higher. We'll see inflation shoot up, and interest rates will have to rise to slow down inflation, and that will increase living costs. It will be a vicious circle. Labour live in a idealistic world where they never think about who will pay for it.

  • rate this
    +2

    Comment number 17.

    We don't need minimium wage, what is needed is a system that equates maximium wage against the lowest paid worker. Higher minimium wage will just mean businesses will either a) employ less people b) lessen employees hours.

  • rate this
    +1

    Comment number 16.

    Its a nice idea but if the only punishment is naming and shaming, when hundreds of companies are doing it the impact is diluted.

    If they planned to legislate for this then I'd be alot more impressed. As it stands, this just seems empty words.

  • rate this
    +1

    Comment number 15.

    Hey I have an idea, why don't we make it even more difficult for small businesses to operate.

  • rate this
    0

    Comment number 14.

    This won't work. When the lowest wage increases in real terms this has an incremental effect on the rest of the working community which in turn needs to increase the wages across departments.

    With more money in the system means inflation which then devalues the first increase.

    Not sure why labour is trying to spin this as people on these low wages are most likely to vote for them anyway.

 

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