The debate on the minimum wage is rarely conducted in a clinical, unemotional way. Malta introduced its minimum wage legislation in the 1970s while Britain whereas introduced a national minimum wage 15 years ago. Political as well as social action leaders from time to time rekindle the debate on the minimum wage. Consensus on the way ahead is today as unlikely as it has been in the last two decades.
Caritas has often urged the government to seriously consider revising upwards the minimum wage because at its present level it no longer guarantees decent quality of life for those who depend on it for survival. Politicians, while publicly showing empathy with those living on the minimum wage, rightly base their calculations on what the cost of raising the minimum wage will be for employers. Reconciling these equally important considerations will never be easy.
With elections in the UK fast approaching, Chancellor George Osborne has proposed an increase of about 10 per cent in the UK minimum wage. His conservative colleague and London mayor Boris Johnson disagrees. Writing in The Daily Telegraph he said: “We should be humbly thanking the super-rich, not bashing them.” I think Boris Johnson made more sense when speaking about bendy busses than on what social fairness should look like.
The latest development in the minimum wage debate in the UK is the publication of a report on the minimum wage by the Resolution Foundation think-tank chaired by professor Sir George Bain, who was the mastermind behind the introduction of the minimum wage in Britain 15 years ago.
One of the negative impacts of the minimum wage system in the UK, and indeed also in Malta, is that many employees are starting work on the minimum wage and failing to secure pay rises for years after
Speaking weeks before the publication of this report, Bain made a very fair evaluation of the merits and weaknesses of the minimum wage system: “The minimum wage has been a clear success but the world has changed in the 15 years since it was introduced. We now know the policy has not caused unemployment, and there is broad political support. But with more than one in five workers in Britain suffering from low pay, it’s time to talk about how we strengthen the minimum wage for the year ahead.”
Dan Silver, co-director of the Social Action & Research Foundation, wrote: “Where lost jobs have been replaced, it is quite often through low-paid- low-skilled jobs that provide employees with little security. There is stark evidence of people adapting to survive in places where opportunities for standard employment have drastically reduced and many examples of people living in a condition in which they are moving in and out of low-paid work.”
One of the negative impacts of the minimum wage system in the UK, and indeed also in Malta, is that many employees are starting work on the minimum wage and failing to secure pay rises for years after, as it has become the going rate in some sectors. There are also a large number of workers who are earning barely more than minimum wage because a ‘ripple effect’ has failed to transpire.
Bain is realistic about the challenges facing anyone trying to reform the minimum wage mechanism: “Reform of the minimum wage will be hard to get right – it would be easy to damage a policy that works well. But our discussions suggest there are ways to take a more assertive and ambitious approach while still keeping the flexibility of the current system.”
The Bain report recommends that the government should “broaden its work on low pay beyond the minimum wage by setting an explicit ambition to reduce the proportion of workers who are low paid”.
I understand this to mean that there should be social and fiscal policies that support workers earning low wages. But we have to wait to see more detail on what is being proposed.
More controversially, the Bain report proposes that the Low Pay Commission should be given more power to “pressure some employers to go beyond the national minimum when they can afford to”.
We need to conduct our own minimum wage debate and learn from the experiences of others.