Joyce McMillan: Left between a rock and hard place

Sadly, Labour’s attempts to champion a higher wage may be confounded by those with most to gain, writes Joyce McMillan
Ed Miliband reiterated his partys commitment to pursue a rise in the minimum wage for British workers. Picture: Ian GeorgesonEd Miliband reiterated his partys commitment to pursue a rise in the minimum wage for British workers. Picture: Ian Georgeson
Ed Miliband reiterated his partys commitment to pursue a rise in the minimum wage for British workers. Picture: Ian Georgeson

It has been a long time coming; but as the Labour leader Ed Miliband arrived in Edinburgh yesterday for a short visit, he might finally have felt free to congratulate himself on achieving a modest shift – not spectacular, not irreversible, but still the first real shift in half a decade – in the terms of political debate across the UK.

The secret of his success, such as it is, has to do with his recent relentless focus on the rising cost of living, at a time when family incomes for most British workers are stagnant or falling. He began his campaign with his famous party conference announcement, back in September, that Labour, if elected in 2015, would freeze energy prices for two years; and he has now expanded it to encompass whole-hearted support for the idea of the living wage, a rate of pay – about £1.30 an hour higher than the current national minimum wage – which is calculated to be just sufficient to meet a working person’s basic needs. Last week, Ed Miliband announced that an incoming Labour government would provide a cash incentive, for firms willing to move to living wage levels.

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Now, so far as the economic arguments go, the case in favour of the living wage is difficult to answer, without resorting to the kind of Victorian rhetoric which alleged that Britain would go bust if it banned child labour in coalmines. The current living wage figure outside London is £7.65 an hour, or just over £15,000 a year. This is possibly just enough money to keep an individual worker in food, rent and shoe-leather; it’s not enough to raise a family, and certainly not enough to think of buying a home in most British cities. It’s also the kind of sum that our wealthy, executive class regard as loose change; some MP’s have been caught out this week claiming a third of this sum in expenses for second-home energy bills alone.

Yet even this, it seems, is too much for some of the dedicated pain-mongers of the British economic scene, who seem to have become totally wedded to the idea that wages paid to workers are a bad thing, and that economic success depends on driving them down as far as possible. That this idea contains some logical flaws is obvious; even if it were not a morally repellent attitude to take to fellow-workers and fellow-citizens, it is fairly obvious that if workers’ purchasing-power starts to fall, and keeps falling, then eventually the entire economy begins to stagnate, as consumer demand and confidence dry up. Last week, the Daily Telegraph’s assistant editor Jeremy Warner published a devastating column pointing out that on every substantial measure of economic development, from real wages, to the proportion of income we are obliged to spend on essentials, the UK is now going backwards rather than forwards, with people worse off than they were in 2005. Under these circumstances, a move towards a slightly higher living wage, for the 5 million British workers now living on less, would have a galvanising effect on depressed local economies, save large amounts on the in-work benefits needed to supplement poverty pay, and relieve a great deal of shameful human suffering, in a country where there is no excuse for it.

What has been most tragic, though, about the debate triggered by Ed Miliband’s proposal has been the number of ordinary British voices that have been heard uncritically buying into the lie that this kind of small increase is unaffordable; and turning on other workers who, they feel, would be getting more than their share. One phone-in featured a senior nurse, paid an unspectacular £13 an hour to take responsibility for scores of patients, who said that she was opposed to the living wage, because it would erode differentials between herself and unskilled workers; the idea that her own pay might be too low never seemed to cross her mind.

And many others, in a true spirit of monetarist sado-masochism, simply took the view that if they had to suffer the impossibility of living on the minimum wage, then so should everyone else. The tone is strikingly similar to the one that prevails in the ugly spat between benefit claimants and low-paid workers, which often seems to boil down to the argument that if wages are so low that working families end up at the food bank, then benefits should be pitched at starvation level. And the phrase “laughing all the way to the bank” comes irresistibly to mind, as British workers, all of whom are working hard or desperately searching for work to make ends meet, fight and squabble over risible sums, which in many firms and organisations could easily be met by cancelling and redistributing a single senior executive pay package.

The time has come, in other words, to ask ourselves some tough questions about why we have become so vulnerable to the lie that decent wages for British workers are increasingly “unaffordable”. All across north-west Europe, economies operate efficiently with a more equal wage-structure than ours, with trade unions accepted as partners in negotiation and management rather than reviled as public enemies, and with an earnings ratio between the top boss and the lowest-paid worker that is more like 5 to 1, than the 20-plus to one that is common in Britain; it is demonstrably untrue that senior bosses need grotesquely large incentives to work well, or that ordinary workers perform better under a constant threat of redundancy and pay cuts.

Yet still, these bizarre, inegalitarian myths dominate our public economic debate, and are absorbed into the minds of people who themselves have everything to gain from a more equal society. And while Ed Miliband has managed to rattle the coalition government and its allies a little, by pointing out some obvious home truths about the decline in British living standards, he still has a long way to go before he becomes the man who will change the language of politics for good; and end this cruel and undignified race to the bottom, in terms of social security and justice, and to the top – the blind summit – in terms of economic arrogance and greed, in its most unsustainable forms.