06 July 2018
Increasing the minimum wage to £10 per hour for workers over the age of 18 would generate £5.6 million a year for the public purse, research by Landman Economics has shown.
The study, conducted on behalf of Unite the Union, took into account increased tax receipts and national insurance contributions, as well as decreased state expenditure on in-work benefits to calculate the net benefit to the Treasury.
Over three-quarters (78%) of young workers aged 18-20 would receive a pay rise if £10 per hour became the statutory minimum and the net average income would increase by over £1,300 a year. In lower income sectors, the majority of workers would benefit, including three-quarters of hospitality workers and two-thirds of retail workers.
” There is something desperately wrong with our economy when 60% of people in poverty are living in working households and over one million food parcels are handed out each year,” Assistant General Secretary of Unite, Steve Turner, commented.
“As in-work poverty grows, big business is benefitting from corporate welfare which is subsidising low pay across the economy in the form of in-work benefits,” he added.
“It would be a virtuous circle helping ease the squeeze on incomes, while increasing the public finances … [as well as] help breathe life into a flagging economy and make work pay”.
The Institute of Employment Rights recommends that the Low Pay Commission (which currently advises on minimum wage rates) should be replaced by a Living Wage Commission, which would be tasked with identifying a pay floor that covers the cost of living. At the moment, the real living wage is estimated to be £10.20 per hour in London and £8.75 per hour elsewhere.
However, our experts argue that this statutory minimum is not enough to ensure workers are paid fairly. In our Manifesto for Labour Law – 25 recommendations for reform, which have been adopted as a blueprint for future Labour Party policy – we propose the strengthening of trade union rights and the reinstatement of sectoral collective bargaining, so that workers can negotiate with employers for a fair pay and conditions floor that applies across entire industries. This minimum can then be built upon at enterprise level.