Monday, 8 September 2014

Is £10 an hour a sensible target for the minimum wage?

I was interested to read that the Green Party of England and Wales is proposing that we should immediately raise the minimum wage from the current £6.50 to a living wage (currently £7.65 an hour outside London) and that by 2020 they say that the minimum wage should be £10 an hour.

I am generally in favour of allowing markets to set prices, and at first glance, if someone is prepared to do a job for a certain amount, then it might seem unreasonable to pay them more. But there are good reasons to have a minimum wage at what is, frankly, the very reasonable level suggested as a living wage.

Apart from anything else, if someone is paid less than a living wage, then they end up being supported by the benefit system - so that just means more taxes for the rest of us. If someone is doing a job then they ought to be able to live on the proceeds of a reasonable working week. Anything less is close to concealed slavery.  Let's have that living wage now, please, government - and why doesn't it also apply to 18-20 year olds who get a pathetic £5.13 minimum wage at the moment?

However, despite my whole-hearted support for the living wage, I can't support the Green Party policy of a £10 target, as it is entirely arbitrary. There are two suspicious things about it. One is the round number nature of £10. This shouts out that it is a number picked out of the air that sounds impressive because it has two digits. The other is having a target for 2020. Unless the Green Party has a time machine they haven't told us about, that's just too far ahead to make accurate forecasts for. We don't know what inflation will be. We don't know what the economy will be like - and to make a commitment to a specific number seems crazy.

What would be much better, but less attention grabbing than that £10 number, would be to have a target of maintaining the minimum wage at a living wage level, year on year. That would be far more practical and meaningful. And it could mean a minimum wage of more than £10 in 2020 - we can't know, of course, we just know it would be the right amount, where £10 certainly won't be. So how about it Green Party? Can you move away from PR-based politics (the driving force, sadly of most green activity) and do something that really would be a good thing? We shall see.

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