The announcement of a Living Wage at the Summer Emergency Budget seems like a pretty tangled conundrum. We’d say, ‘Don’t worry, we’re here to make sense of it,’ but it looks as if not much of it makes sense. We’ll say, then, here’s your need-to-know.
After many years of campaigners pushing for the legal stipulation that companies pay a minimum wage, the Living Wage now takes into account the high cost of living workers have and the Government has decided to enforce it. But there are some huge problems with it. Already:
1. It’s not actually the same Living Wage campaigners have been asking for
The Government’s Living Wage will be £7.20 per hour, going up to £9 per hour by 2020. The problem with this is that the Living Wage Foundation (LWF) has been looking for £7.85 per hour for those working outside of London, and £9.15 for those working in London. The Government has taken the LWF’s concept and turned it into their own, used the exact same language but offered so much less.
2. Apparently, people under 25 don’t need to live
The ‘Living’ Wage as we’ll now call it, will only apply to those over 25, because apparently, when you’re under 25, you’re not living? We’re confused too, so let’s strip it away to the maths.
A worker aged 21-24 must be paid at least £6.70 an hour under the national minimum wage, which means if they work 40 hours a week full time, they’ll earn £12,864 minimum salary. A worker over 25 must be paid over £7.20 an hour under the ‘Living’ Wage, which means they’ll earn £13,824 a year under those same working times.
It’s not a huge difference, but when you’re talking about numbers that small, a grand or so can make a really big impact. And if you’re in London, where the average rent is £1,500 a month, and 18-21 year olds now won’t be given housing benefit... well, unless you’ve got rich family or are from London (and your parents have a spare room for you), you probably won’t be able to afford to work in the capital. Yes, it costs to work.
3. A third of retail workers won’t be eligible for the ‘Living’ Wage
One million of the three million people working in retail are under 25, so they won’t be given the ‘Living’ Wage. They will also see their working tax credits slashed, according to the British Retail Consortium
4. Companies are seeing this last point as a good thing
Various companies have been neither here nor there about the new ‘Living’ Wage, because their staff are so young they won’t have to fork out for it. The Government even says the wages of younger people are kept lower as ‘the priority is to secure work and gain experience’ for them.
It’s almost as if the Government wants companies to sack its workers when they turn 25! FYI, 60,000 people are set to lose their jobs because companies would rather cut staff than pay them higher wages.
5. And some companies can’t stand the idea of this ‘Living’ Wage
The Association of Convenience Stores, already riled by the budget’s relaxation of Sunday trading hours and (probably) already irked for years about the proliferation of Tescos and mini Tescos in every single high street going, have said that paying a wage for over 25s to live on is a ‘reckless measure that will have a significant negative impact on the sector.’
6. The Government can’t tell companies what to do, really
Another announcement of the budget is that the UK will drop tax on corporations to 18% by 2020, making it the lowest in all the G7. This is allegedly to encourage companies to pay their staff higher wages (tldr? The Government’s telling companies, ‘We’ll let you pay less tax if you pay your staff more’).
But, with those 60,000 jobs to go in light of the higher wages, it looks as if the Government has admitted it can’t actually get companies to pay their staff enough money to get by. Just FYI, the Government spends £8 billion on benefits for people out of work.
If you think that’s high, have a think about it spending £76 billion on people IN work, simply because they’re not paid enough to get by.
All in all, it’s fantastic that the Government at least seems to be trying to address the issue of higher wages for workers, but there are so many stumbling blocks to this new policy. Living Wage? We’re not sure what sort of life the Government means…
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Follow Sophie on Twitter @sophwilkinson
Photograph by Lukasz Wierzbowski
This article originally appeared on The Debrief.