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Osborne's threat to the strivers

LAST year the minimum wage rose by 11p an hour from £6.08 to £6.19.

It amounted to an additional £4.07p a week for anyone on these rates who was fortunate enough to work 37 hours a week. Now, low-paid workers are likely to have their earnings frozen because the Coalition Government believes at an increase could harm the economy.

It is a particularly brazen argument in a week when cuts to benefits begin to take effect and there has been a public outcry about the so-called bedroom tax (a reduction in housing benefit for tenants with an additional bedroom) and those earning more than £150,000 gaining from a reduction in the top rate of income tax from 50p to 45p.

By writing into the Low Pay Commission's terms of reference that, before agreeing future increases in the minimum wage it must formally consider the impact on employment and the economy, the Government has raised the prospect of the first across-the-board freeze or cut in the minimum wage for everyone in the event of there being no economic growth.

The Chancellor, George Osborne, apparently saw no irony in saying he wanted April to be the month in which the Government made sure work pays. This was a reiteration of the Tory party's slogan on benefit reform but it flew in the face of the fact that the simplest and most effective way of ensuring that people are better off in work than on benefits is to raise the minimum wage. Instead, it will be frozen or even cut.

It is difficult to see any consistency in the Government's approach when, by exempting the lowest-paid public sector workers from the pay freeze (even if the rise is 1%), it has recognised that people on low wages face the greatest challenge in meeting household bills when food and fuel costs are rising. While people with the lowest incomes will benefit by the rise in tax threshold to £10,000, a typical family on the minimum wage will gain only £17 a year, according to Citizens Advice.

It is clear from the campaign for a living wage, which wants the minimum raised to £7.45 an hour, that current rates are not sufficient to meet the cost of living for many families. Those on the minimum wage usually qualify for housing benefit and tax credits. For a Government intent on simplifying the system to increase that dependence makes no sense.

Instead, the minimum wage should be enforced to prevent employers exploiting vulnerable workers who are charged for uniforms, paid cash-in-hand or have tips counted as part of their wages.

On a day when a £5 million increase was announced in the Queen's sovereign grant to cover the costs of the royal household and official duties, the carers, cleaners, shop workers and kitchen staff who provide essential support for the elderly and are the backbone of many businesses must be forgiven for asking how a modest increase in their wages could harm the economy. In fact, the question should be shouted from the rooftops. All in it together, Mr Osborne?

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