Sunday, 30 May 2010

The Moral, Social and Economic Case For A Living Wage

The Living Wage is an idea whose time has come. Boris Johnson has carried on with the introduction of a Living Wage in London, following the tremendous campaign from London Citizens and Ken Livingstone’s original introduction of the idea. Ed Miliband has made some kind of Living Wage central to his (so far very impressive) leadership campaign – a promise that will surely also be picked up by other leadership candidates. James Purnell – a much missed voice in Parliament for radical ideas - has been campaigning heavily for a Living Wage since leaving office.

Although it is a shame that senior Labour politicians didn’t consider ideas such as a Living Wage and Low or High Pay Commission until they were virtually out of office, at least it is now on the political agenda. Indeed, David Cameron used a Guardian column during the election campaign to name check the London living wage.

The idea, is of course, not a new one. The 1928 Labour platform had a ‘Living Wage’ as its number 1 pledge. A ‘Living Wage’ goes back, at the very least, to Victorian radical thought. The campaign for a Living Wage deserves to be on political centre stage. There is a strong moral, social and economic case for the Living Wage.

The moral case is clear. The minimum wage has, in many areas, fallen behind the rising cost of living. In an age of rising economic insecurity, where economic globalisation has had a detrimental effect on the take home pay of ordinary working people, low paid people are moving nearer to the poverty line. Too many low paid workers are still being paid below what economists regard as the ‘poverty threshold wage. One of the world’s richest societies should not have people being paid below the poverty threshold.

And this moral case leads entirely to the social case for the Living Wage. Low pay means that people have less time to spend with their children and their families. Low pay means that people have less time to get involved with their communities and play their part with the wider society. Low pay and closeness to the poverty line has effects on people’s health, morale and family life. If we genuinely believe in strengthening communities and empowering individuals, then a Living Wage should be an important part of making that happen.

There is also an economic case for a Living Wage. Take the experience in London – as the Mayor of London argues, paying the Living Wage, “makes good business sense too. What may be viewed to a company to be an unaffordable cost … should more often be viewed as a sound investment decision... Paying decent wages reduces staff turnover and produces a more motivated and productive workforce.”

A number of studies have supported the view that a Living Wage actually produces a more productive workforce and boosts the economy. And that is without going into the fact that a Living Wage is bound to improve incentives to work and alter the perverse disincentives that result from low pay and a poorly designed tax system.

The case for a Living Wage seems clear. It is both moral, social and economic. I am sure that the Living Wage campaign will continue to gain force and momentum over coming years.

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