Increasing the minimum wage will benefit us all and help the nation pay off its debt, says Dave Watson
January – when we all resolve to tighten belts, cut our spending and pay off those Christmas debts. It’s not much comfort, I know, but if it feels worse this year, it’s because it probably is.
More of us than ever are feeling the squeeze. There is no sign of let-up. One in six of us borrowed this year to buy food, drinks and presents at Christmas. TUC analysis shows that most of us will take until June to pay it off. Consumer intelligence says the low paid will still be struggling to pay it off in October, just in time to borrow again for Christmas 2014. Consumer debt has increased by 4.9 per cent in the last year; the average debt incurred over Christmas will be £685 per adult. The problem for both Scottish and UK governments is that there is no sign ordinary people are benefiting from any economic recovery.
Parties are tripping over themselves to promise how they will cut or freeze our taxes at the next election. Coalition parties are outbidding each other on raising the personal tax allowance. Bids are at £12,500 and counting. Our First Minister makes much of freezing the council tax, cutting corporation tax and “no tax rises in an independent Scotland”.
The problem is that none of this does anything for the real issue: low pay. Five million in the UK already live below the personal allowance threshold, and most of them get council tax benefit, so both policies make a marginal difference at most. Like so much of public policy, it’s the well off that will mostly benefit.
British workers have experienced the longest real wage pay squeeze since 1870. Inflation has risen faster than wages for almost 43 months.
Britain needs a pay rise. The share of the economy which is going on wages continues to decline. In the 1960s and 1970s, up to 61 per cent of the economy went on wages. Since the 1980s, it has never gone above 56 per cent. These small percentages make a big difference to our living standards. It is no coincidence that, for the first time, we have more in-work poverty than out-of-work poverty.
But while it is the rich who get the pleasure, there is more and more evidence that we are less and less willing to give the poor the blame.
It seems eight in ten think we should raise the minimum wage. Taking action to tackle our low-wage, high-cost economy is not politically unpopular either. That nine in ten Labour and Liberal Democrat voters support an increase in the minimum wage is perhaps not surprising. However, more than seven in ten Tory and UKIP voters do too.
Perhaps they already see how a pay rise for Britain’s low paid could benefit us all. Small businesses will benefit from the 90 pence in every pound they spend in their local community. Why do we pay a cleaner less to pay her more in tax credits? A rise of £1.50 to the minimum wage will help her pay her Christmas debts and help the nation pay its debt by cutting the welfare bill by £5 billion.
And it will cut child poverty – two-thirds of children living in poverty have at least one parent working. We should not underestimate the extra costs needed for health, schools, housing and social work to fight the social consequences of poverty.
In the end, it comes down to what kind of country we want to live in. In 2014, that comes down to the value we give people who were waiting our work’s Christmas lunch tables, shop workers working until late on Christmas Eve and who were back on Boxing Day, care workers looking after our elderly relatives, NHS staff running hospital wards throughout Christmas and New Year – or police clearing up after the messy drunken nights in towns and cities across Scotland over the festive season.
We are one of the richest countries in the world and we run food banks. This cannot be right. Do these people not deserve to benefit from living in one of the world’s richest economies too? There is another way we can raise low pay.
This year marks the start of UNISON Scotland’s “Worth It” campaign. Public sector workers have seen more than their share of wage cuts. The Institute for Fiscal Studies and Office for Budget Responsibility have both confirmed the gap between private sector and public sector pay has increased and will increase until 2018 and beyond.
We think investment in our public sector staff and the low paid across Scotland is worth it. The polls say that you do too.
• Dave Watson is the head of bargaining and campaigns at Unison Scotland