Friday, 9 October 2009

How the minimum wage has become a weapon against the poor, not against poverty

At the start of this month, the national minimum wage in Great Britain increased from £5.73 per hour to £5.80 ph. Two days before this came into effect, HM Revenue & Customs (HMRC) also released a helpsheet which announced that as of this date "amounts paid by the employer to the worker which represent tips, gratuities, service charges or cover charges paid by customers do not count towards national minimum wage pay."

After the long running campaign by Unite the Union to against exactly this practice, this would seem to represent a victory. Indeed, the union was "pleased to welcome the launch of the ‘Code of Best Practice’ on service charges, tips, gratuities and cover charges" and trumpeted its own involvement "in the development of the principles which aim to bring transparency to the hospitality sector." However, the victory is partial at best. Although this now brings employers into line with the national minimum wage and guarantees all workers this base amount without having to make it up in gratuities, plenty of problems remain.

The most glaring is that the law clearly allows for age-based pay inequality, with employers perfectly entitled to pay 18 to 21-year-olds and under-18s lesser rates for doing exactly the same job. Their base rates are considerably lower, at £4.83 ph and £3.57 ph respectively. That, according to BBC News, "from October 2010, the adult statutory minimum rate would apply to 21-year-olds," doesn't make the injustice any lesser.

At 18 or even 16 years of age, a person may be working (just as people over 21 are) to support themselves, to keep a roof over their heads, or to pay tuition and see themselves through university or college. Clearly, this is a lot harder to do with £4.83 ph than with £5.80 ph. If such an inequality was forced upon workers based on their gender, race, or sexuality, people (quite rightly) would not stand for it. Such a discrimination against older workers would provoke an uproar. That, applied to youth, it can be embedded in the statutes themselves without remark, is an indictment of exactly how far our commitment to equality goes. What people earn should be determined by the job they do, not by who they are.

Also of vital importance is the level of the minimum wage itself. Last year, it increased by 21 pence. This year, it went up by just seven, and even less for younger workers. The British Chambers of Commerce (BCC) are "pleased that the increase is only a modest one," though they believe that "a freeze would have been more help to business," and note "that the Low Pay Commission and the government have largely understood the seriousness of the situation."

Such comments show exactly where the priorities of business groups such as the BCC lie. Their interest is preserving and increasing the profits of those with capital at the expense of those who are forced to sell their labour in order to produce those profits. The minimum wage, one of the few safety nets for the poor under this system, continues to decline in real terms.

A report for the Joseph Rowntree Foundation in July, titled A minimum income standard for Britain in 2009, found that "a single person in Britain needs to earn at least £13,900 a year before tax in 2009, in order to afford a basic but acceptable standard of living." For those on the minimum wage, this amounts to working 47 hours a week for the whole year. "A couple with two children need to earn £27,600." To achieve this on minimum wage, each partner would have to work 46 hours a week for the year, hardly a situation conductive to raising children.

The report also found that "the cost of a minimum household budget has risen by about 5 per cent for most families." This is "well above the general inflation rate, because someone on a minimum income spends a greater than average portion of their budget on food, domestic fuel and public transport, whose prices have risen by 7 to 12 per cent." It is also well above the 2% increase in the minimum wage and the official 1.6% rate of inflation. That businesses and the government would advocate such a low increase, in the name of what is "good for business," is the height of callousness. Especially after the announcement at the end of September that "UK banks accepts curbs on bonuses" turned out to be a falsehood, as "the curbs do not limit bonuses" at all but merely mean "the banks having to disclose all such payments."

With their every breath, those with power and influence continue to announce new ways in which the poor can pay for a crisis created by the rich. As long as they do so, we must resist.