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 593.

    People don't just need to be earning more per hour, realistically that will just lead to higher inflation until costs catch back up to current levels.

    People also should be working less hours.

    More people could be employed, and the burden on the NHS from years of repetitive motion or heavy manual handling etc could be reduced.

  • rate this
    +7

    Comment number 592.

    As we are in the EU, will this living wage apply to Polish, Romanian, Bulgarian etc applicants?

    I can imagine it might tempt a few more million over here to compete with our low paid.

  • rate this
    -1

    Comment number 591.

    #575: "It is generally agreed that the 'living wage' is in principal a good thing"

    Maybe, but it should certainly not be the subject of government interference. Wages should be determined by the market and by agreement between employees and employers. The NWM depresses incomes by saying to (some) employers "this is the low wage you can get away with".

  • Comment number 590.

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

  • rate this
    -2

    Comment number 589.

    I have no doubt that Labour will be able to introduce the living wage. However companies forced to pay the living wage to supply the Government will raise prices to cover it and this price escalation will end up being paid through higher taxes.

    This is typical Labour economics, a grand gesture to show rising living standards but with no thought to how it will be paid for.

  • rate this
    -4

    Comment number 588.

    Be nice to see a few toffs trying to live on this pittance..i feel that "something " would be done PDQ if the betters had to struggle..

  • rate this
    +1

    Comment number 587.

    If you want to run your own business, then it should be with a view that a good days work, pays a fair wage. If you don't believe this, then don't run a business.
    Also, the minimum wage is exactly that. It was not designed to be the maximum or the status quo. We need to set an example as a modern country, not mimic the way the likes of china behaves.

  • rate this
    +3

    Comment number 586.

    What a brilliant idea. lets put up everyones wages.
    Business will only have to put up its prices to pay for the higher wages,
    which means you will need to earn more to pay for the higher prices of products.
    So its a perpetual cycle.......no one wins

  • rate this
    0

    Comment number 585.

    I wonder how many obese Mps, would be able to afford ,to buy all their pies and cakes on just 6 pound an hour?

  • rate this
    +2

    Comment number 584.

    566.Leodisthefirst

    If this scheme was adopted across the board it would cost in the region of £12bn to £14bn. That money has to come from somewhere. Where?
    -----------------------------
    From the devaluation of the savings of those who were prudent. Drive up inflation, peg interest rates at a rediculously low level by printing money and rob savers of their spending power.

  • rate this
    -1

    Comment number 583.

    If only it was this easy. Real wages are determined by Supply and demand. If you raise wages above market rate you will reduce demand for labour and increase unemployment. Otherwise lets make minimum wage £50 per hour! I exaggerate to make the point but i am afraid the way to increase wages is to get the economy growing. To do the latter wages may have to go down before they can go up again!

  • rate this
    +2

    Comment number 582.

    568. Peter

    You try and find one in social care that can! It's always a joy to hear the lack of understanding people have for how business works
    +++
    I think you'll find that virtually everyone understands greed and immorality.

  • rate this
    +3

    Comment number 581.

    MPs/Ministers in Westminster or in devolved governments - MEPs too living on the minimum wage and no allowances for all their mortgages and ALL bills paid for by the tax-payer? Now that would be an interesting experiment in democracy?

    Let's not also forget their frequent breaks paid by the tax-payer too!

    Our representives can't survive on £68K a year without claiming ALL the above - very sad.

  • rate this
    0

    Comment number 580.

    @531. raven

    I didn't compare to Communism, but to the wage controls under socialism in the USSR. Socialism is different to Communism; (very) generally socialism refers to the organisation of economic policies, communism to organising an entire society. I think it is U who needs to learn the difference?

    "you keep making references to the USSR". As I said @513, U STILL have no evidence of this

  • rate this
    +4

    Comment number 579.

    Leodisthefirst #566
    just maybe the £12-14 bn could be taken out of the £100's bn of profit these companies make in profits.

  • rate this
    0

    Comment number 578.

    lowering the amount people pay in tax is better than increasing the min wage.

  • rate this
    +4

    Comment number 577.

    If people earn a bit more, then they will be able to spend a bit more on the goods and services that companies that they are employed by produce, which will in turn boost the economy. Just very basic econmics really.

  • rate this
    +1

    Comment number 576.

    127. Bastiat
    "young, uneducated and unskilled"

    That's the fault of state education. We don't educate anymore. We give them enough skills to complete a job application form, for manual labour. Kids, our own kids, don't stand a chance. Phhuck those from outside our borders, who take and don't contribute.

  • rate this
    +2

    Comment number 575.

    It is generally agreed that the 'living wage' is in principal a good thing, unless you are a greedy, corrupt, tax avoiding, unethical business owner who feels that he deserves a medal as he 'employs' a few people.

    Why not cut down on the 6 holidays a year, get a new car every other year & stop spending cash on a mistress - staff are vital to your profits, be nice to them, they'll be nice to you.

  • rate this
    +9

    Comment number 574.

    Here's a radical idea: Why don't you force Apple, Starbucks and Vodafone to pay their dues in tax,

    -The reason why multi nationals feel that it is their right to avoid tax is the same reason why they believe that senior executives pay should have risen 5 times faster than everyone else's over the last 30 Years.

    It's a simple 5 Letter word

    GREED!

 

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