Today’s budget ended with the Chancellor announcing a “National Living Wage”. The name was right, the marketing was cunning but sadly the policy bears no resemblance to a Living Wage. The Living Wage is an ethical principle converted into a wage rate; today’s “National Living Wage” is a welcome rise in the Minimum Wage, wedded to a damaging marketing gimmick.
What is a Living Wage?
Simply put a Living Wage is enough for a person to exchange their full time work for a decent standard of living. Converting this principle, first laid out in the 1891 papal encyclical Rerum Novarum, into a workable hourly wage rate is a serious and difficult task.
The Joseph Rowntree Foundation, the London Mayor’s office, Loughborough University and others undertake a large research project asking people throughout society what is needed for a decent minimal standard of living. The goods and services required are priced up and the hourly wage needed by a full-time worker to afford them is calculated. It involves estimates and compromises as families are all different with different needs. But it is an honest attempt at real social justice.
The legal National Minimum Wage was never set with reference to how much a person needed to live. It was set at a sufficiently low level such that it was believed it would not reduce the number of jobs in the economy. Today’s announcement was a very welcome an increase in the Minimum Wage, taking back to pre-recession levels. It was not however set with reference to how much is needed to live – and the new remit for the Low Pay Commission confirms there is no intention to do such a calculation. In short it is not a Living Wage.
Stealing the name – forgetting the principle
The remit given to the Low Pay Commission today shows what appears to be a naked attempt to steal the name “Living Wage” and subvert it. The name Living Wage is worth stealing mainly due to the brilliant work of churches, charities and especially the Living Wage Foundation in modernizing and explaining the simple morality of the Living Wage principle.
Previously the Low Pay Commission set rates for different age groups, with the adult rate being higher and applying to over 25 year-olds. After today the Commission will do exactly the same thing but the difference between the rate for under 25 year-olds and over 25 year-olds will be renamed “the Living Wage Premium”. This “premium” will not be set with any reference to what people need to live nor to the Living Wage principle.
This strange arrangement makes no practical difference, but does grab the name “Living Wage” as well ensuring the name “Minimum Wage” is remains. An improved but still inadequate Minimum Wage has been rebranded a “Living Wage” and the task of explaining and campaigning for a real Living Wage has been made more difficult. .
The Living Wage it is a principle that should be treated with respect because paying people enough to live on is important. It is a principle that is almost universally accepted – today’s rise in the Minimum Wage alongside the attempt to commandeer the Living Wage name is evidence of this. It is however damaging and unacceptable to call a wage that people cannot live on a “Living Wage”.
