The minimum wage is £6.50.
Increasing it to £6.70 is a 3% increase, which is not much given that we still
have inflation in some areas. It’s not a promise to help the working poor in
any particular way. Raising it to £8 by the end of the decade is about 4% per
year. Yes, these are necessary and useful promises, and probably slightly above
growth and inflation, but not groundbreaking. It could be worse; they could be
promising to scrap or lower the minimum wage.
But if the
Conservatives wanted to help low-paid workers (and bolster demand in the wider
economy, cut government expenditure on tax credits and remove market-distorting
subsidies on low wages) they could offer the living wage, of £7.65 per hour.
That would be an 18% increase, so the Conservatives are 1/6 of the way there.
Right direction, wrong amount.
2013 figures are that 4.8 million
people earned less than the living wage. The low pay commission estimates that
there are 1,386,000 minimum wage jobs. If
we assume that all these people work 40-hour weeks, we find that keeping the
minimum wage too low costs poor people £3.3 billion in total per year, well
over £2,000 per person. There are plenty of other people earning less than a
living wage but not the absolute minimum, so the overall suffering is much
larger.
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