Monday, 15 October 2012

Making a living

At last week's Scottish Green Party conference in Glasgow I was pleased to sign the Scottish Youth Parliament's Fair Wage pledge, along with all our councillors and MSPs. I was also very pleased to be part of a unanimous decision in August for Midlothian Council to introduce a Living Wage of at least £7.20 per hour by the end of this year.

For me, a living wage is more than justice, it also makes economic sense. It should also make sense to many people, particularly on the Tory Right, who consistently oppose it.

When the Minimum Wage was introduced, they, along with many employers, said it would destroy jobs and put companies out of business. It didn't.

They argue at the same time that the welfare bill is too high. What better way to reduce it than to stop subsidising the payment of unrealistically low wages by unscrupulous employers? If we believe there is a minimum income people need to live on, and that incomes below that level should be topped up by state benefits, then the responsibility in a free market is that this should be borne by the labour market and not by the state.

This market distortion also means that employers already paying a living wage are put at an economic disadvantage. Free marketeers know that producers have to live within certain constraints - they all have to abide by Health and Safety and environmental protection laws, for example. A minimum wage is just another such constraint, and so long as all companies have to abide by it, then the free market continues to apply.

So what would happen if we increased the level of the minimum wage to the living wage? Yes, some prices would rise, but as the cost of topping up benefits drops, the demand on tax payers would reduce. The cost of administering many means tested benefits would also be saved. Companies currently paying a living wage would see a marked increase in competitiveness and a level playing field introduced. Also, putting money into the pockets of those least well off is known to be the most effective way of boosting the economy as they are most likely to spend any extra income.

Then there's the 'benefits trap'. Tories and tabloids consistently moan about people on benefits being better off than working. If so, then give people an incentive to work, not a disincentive not to. Most unemployed people want to work and would be more productive if paid at a rate where they feel valued.

Despite the recession, disposable incomes are around the highest in history; I think it's about time we made sure everyone who goes out to work has at least something left over at the end of the week.