Financial News

  • 5 November 2012, 19:40

Living Wage: Ed Miliband Wants Pay Shake-Up

Labour leader Ed Miliband has vowed to deliver a "living wage" to millions of people if he wins power at the next election.

The wage - the minimum rate deemed necessary for an acceptable standard of living - is a key plank of Mr Miliband's "One Nation" vision for the country.

The rates were raised on Monday to 7.45 for outside London and 8.55 inside the capital.

This is significantly higher than the minimum wage, which currently stands at 6.19 per hour for over 21s and even less for teenagers.

Labour is looking at three ways to make the new pay terms the norm, including naming and shaming listed companies who do not comply.

Firms who fail to pay enough could also be blocked from Whitehall contracts, while Treasury-funded incentives could go to higher paying companies.

The Opposition leader is believed to have worked closely with his brother David on the strategy, in a sign relations between the pair are finally thawing.

He met with leaders of Labour local authorities across the UK who are already implementing the pay structure.

He said: "Too many people in Britain are doing the right thing and doing their bit, helping to build the prosperity on which our country depends, but aren't sharing fairly in the rewards.

"It's not how it should be in Britain, it's not how we will succeed as a country in the years ahead because we can't go on with an economy that works for a few at the top and not for most people. We need to change it."

He continued: "It is only a Labour government that will address the living standards crisis faced by so many.

"Even when money is tight and Britain is run by a Tory-led government, Labour councils have been driving the living wage forward. First in London and now across Britain.

"There are already scores of British businesses who are saying that the living wage makes sense for them because it improves staff retention and reduces absence rates.

"We will learn from them and find ways to help other businesses become living-wage employers."

Mayor of London Boris Johnson announced the new rate for London and called for it to be paid by all local authorities in the capital and across Whitehall.

He warned that some employers would find it difficult to pay the sum which he said was why he wanted the rate to remain voluntary.

No Conservative-controlled council has signed up so far and the Greater London Authority is only in the process of being accredited.

New figures released on Monday show that the Living Wage campaign has lifted 45,000 people out of working poverty since its launch in 2001.

But a report last week showed nearly five million workers - one in five - are paid less and suggested they are being hardest hit by the economic squeeze.

Organisations that are now officially accredited include KPMG, Birmingham City Council and Save the Children. Barclays has paid it in London since 2007.

TUC general secretary-designate Frances O'Grady said: "It is essential that more companies follow suit. We want millions to benefit from a living wage, not thousands.

"It is simply not good enough for large companies to plead poverty at a time when their cash reserves are increasing.

"Employers who pay the Living Wage will find it much easier to recruit and retain good staff. The extra pay in the pockets of low-paid workers will also help inject much-needed consumer demand back into our economy."

The Institute for Fiscal Studies estimates that every person moved onto the living wage would save the Treasury around 1,000 in tax credits and from increased taxes.

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