The Courier & Advertiser (Fife Edition)
A price well worth paying
How much are you paid? Its a question we find impolite or provocative, which is odd as we all work for money and nothing is more annoying than finding someone who earns more for the same job.
It is rarely pay which irritates us but pay parity – the horror of discovering your colleague is on a higher return than you.
Pay is a vitally important policy because it determines so much else – where we live, what we eat, how we view tax.
Yet pay is rarely a policy. Only when the Labour government of 1997 introduced the minimum wage did it form a central political issue.
You may recall lots of people said a minimum wage would be disaster.
In fact, UK wealth has grown dramatically since it came in.
It turns out it is good to put more money into the hands of workers – who would have thought?
This is important to remember as the applause dies away from John McDonnell’s speech at the Labour conference.
A man labelled a bully in Question Time, who does appear capable of causing an ideological division in an empty room, started this week all sweetness and light.
Presumably thinking himself vindicated by the leadership victory of his pal Corbyn, the shadow chancellor went on to the airwaves in statesmanlike way to talk of how a Labour government would invest in infrastructure.
His speech then included the surprise news of raising the minimum wage to £10 per hour.
Not a surprise if you are a Socialist Worker’s member, as the hard left have been pushing this for many years.
Yet it is a policy which shouldn’t be left to the left.
In Scotland 40% of working age people pay no tax at all.
This is not because they are benefit scroungers, but they simply don’t earn enough.
The “working poor” is one of the biggest issues facing policymakers in Scotland – how to get people who contribute to society to enjoy a better quality of life. The obvious answer is an increase in wages.
There is a sound economic reason to recommend this policy.
By lifting people out of poverty, you reduce their expense to the state and you put more money into circulation.
High wages for a few do nobody much good, except obviously if you happen to be so lucky as one of the lucky few.
Higher wages for the many do everybody some good – it boosts economic activity.
The problem is wages take up so much of the public and private sector costs.
Higher hourly wages will eat into the profits of Uber, Amazon and Sports Direct – and many more like them – who run business models dependent on low wage bills.
In all the cases mentioned above, the companies would still be well in profit even if they did pay £10 per hour to the workers.
We have to resist the idea that new jobs must be low-paid.
Allow that idea to take hold and society will implode.
For the public sector, higher wages are a big challenge.
Half of what the Scottish Government spends is on wages.
The budget is broken up by categories like health, education, local government etc. That disguises the fact pay is the big bill.
Increase public pay by around 25% and you logically increase the public sector bill by the same amount.
In Scotland that’s roughly an extra £7 billion per year. That doesn’t make it an impossible policy.
You could raise another £7 billion – John McDonnell suggests a wealth tax, which is also not that far-fetched.
However, Scottish voters show no appetite for a new tax, even if it won’t affect them (wealth taxes affect the wealthy).
What keeps people in dead-end jobs is the sense that it’s simply not worth the extra hassle of more responsibility for a few more pennies in the wage packet.
If wages took a 25% jump, then you may well radically change how people feel about work.
People who are better rewarded might be prepared to do more work, or accept redundancies.
You would expect to save money elsewhere. Less spent on tax credits, for example.
In policy circles, from the USA to Japan, the rules are changing on what is normal and what’s crazy – and none of what Labour suggest is on the crazy scale.
The reason policies which might have sounded daft are now openly discussed is because the world is changing. We have expensive states to run on slow economies.
A higher minimum wage at £10 may sound like the stuff of student radicals, but its firmly in the territory of a sensible response to an economic problem. You may think it’s fanciful but it will happen – and soon.
Higher wages for the many do everybody some good