Posts Tagged ‘living wage


The Living Wage needs to be a central plank of Labour’s economic narrative- Darrell Goodliffe


Labour needs a strong and coherent economic narrative which tells a story of a new economy, one built out of the ashes of austerity and the financial crash. Of course, it is not enough to string pretty words together, we must practically show how we will do this through eye-catching policies which encapsulate and embody the vision we want to put to the electorate. If you look at the French election, Francois Hollande did this well by pushing the 75% top-rate of tax on earnings over  1 million euros. This embodied his insistence that the rich shoulder the burden of rebuilding France’s shattered national economy.

Ed Miliband has already expressed the view that it is the toiling mass of people who are society’s real wealth creators and therefore they are the ones who should be most rewarded. Ed is correct in this point of view but he has yet to substantiate it with a policy that makes his point in a clear and unequivocal way. However, the living wage fits the bill perfectly, coupled with real controls on top incomes it would send a clear signal that Ed is prepared to back his fine words with equally as fine deeds.

We will be assailed with all the traditional arguments against, ‘it will lead to unemployment, it would be bad for business’, etc, etc. However, put lightly, these arguments are economic hokum. J K Galbraith deals with some of the arguments here in a US context:

Would prices go up? Some would. But rich people can afford it — and workers would have extra income to pay the higher prices, so most of them would come out ahead. Women in particular would benefit because they tend to work for lower wages. With more family income, some people would choose to retire, go back to school, or have children, making it easier for others who need jobs to find them. Working families would have more time for community life, including politics; Americans would start to reclaim the middle-class political organization that they once had. Because payroll- and income-tax revenues would rise, the federal deficit would come down. Social Security worries would fade.

Not only that, but households would be able to, slowly but surely be able to make headway into the personal debt mountain which blights our economy; here Ed will need to offer other support, like the extension of Debt Relief Orders and action against high prices (something he has already muted). However, a living wage would be a huge boost to struggling households and therefore to our flagging economy.

Up to this point, Ed has only mooted a ‘voluntary’ living wage (in return for which companies would receive tax incentives) however, this is pointless and misguided. If it is voluntary it would introduce two-tier wage system (with a clear division between companies that only offer minimum wage and those that offer a living wage)  which would run the risk of increasing rather than tackling social inequality. Also, the benefit to the state would be limited because it would be paying out money to the private sector in the form of tax breaks (as well as presumably footing the bill of increased public sector wages).

Simply raising the minimum wage to the level of the living wage, which is what Galbraith advocates, therefore is more economically sensible and beneficial all round as opposed to a half-baked voluntary scheme. Ed needs to be brave and not fight shy of the ideologically motivated but economically illiterate opponents of a living wage; he needs to take them head-on and make the living wage a central plank of Labour’s narrative which espouses a bold and radical vision of a new economy created out of the ashes of the old.

Darrell is an ex-intern and Labour activist and blogger and a candidate for NEC.


3 Policies for a better Britain…

We’re all quite depressed right now aren’t we? The Coalition are ruining our country. Cheer yourself up! what policies would you put in if you were in government? These are just three of mine…

Nationalised railways

It has become abundantly clear over the last decade that the privatisation of the railways and more crucially the way in which this was done, has resulted in the UK having a overly complex, overly wasteful and completely unaccountable rail system where the public purse  pays for the vast majority of the investment and the private companies reap the rewards.

Whilst I welcome the Government increasing the lengths of franchises in order that private companies will hopefully invest more, I do not believe that this companies can truly be relied on to do so as the increasing overcrowding, increasing ticket prices and increasing overall dissatisfaction in the railways shows that profit is clearly the only aim of these companies and they know people will still use the railways so long a they do eventually get them from A to B.

Clearly the simplest solution is to nationalise the railways (at least initially) in order to secure the accountability that is lacking so much currently. it is obvious that a situation where the track, rolling stoke and stations are owned by different companies is incredibly problematic and only solution seems to be to nationalise. when my train is late I currently have three entities who may be to blame; the train company? is it transpenine’s fault for not building a correct timetable around passengers (or customers which we are now referred to), is it the track maintenance? is Network Rail to blame? Or is it the company that runs a station for a particular bottleneck at a particular time?.

With a nationalised system the blame game, which now costs the railways an extortionate amount, is ended. British Rail would also not have to negotiate with different companies to run an improvement program or create a timetable or fix problems in the system. British Rail should be re- created as a unified body with the sole aim of improving the passengers experience. No longer should the taxpayer be pitted against the rail passenger as they are all to often one and the same, increase the standard of transport and you perform a vital service for both.

Robin hood tax

I can’t explain this better than Bill…

for more information click here.

National living wage

For some time in the uk there has been an argument about benefits. There is agreement (not always a universal agreement) that often the benefits system does not result in an adequate incentive to go back into employment as often wages can be worth less than the benefits one can derive from not working. It seems to this humble observer that the left and right both pose plausible resolutions to this situation, but that the left’s solution is superior by virtue of its moral worth.

The Conservatives (as well as many of their lib-dem) lapdogs seem intent on what is essentially a race to the bottom with benefits being lowered and given to less people in order to effectively force them to work for whatever wage they can get with the only alternative being destitution.

Labour’s introduction of a minimum wage reversed this and set in play a race to the top. The problem now is people are again arguing that benefits are too high and don’t act as an incentive to work. The next and only logical step is to introduce a Living Wage. The Living wage is currently calculated at £7.20 per hour outside london and £8.30 per hour in London and is aimed to let “every worker in the country…earn enough to provide their family with the essentials of life.” (more information can be found here).

One very important caveat, however, is that, small businesses must be given as much help as possible to be able to afford such wage.