The Minimum Wage – Never Far from the News

The minimum wage has been in the news in the UK over the conference season and beyond. It seems the policy is beginning to stir up as much controversy as it did when it was being seriously debated prior to Labour’s victory in 1997.

First, the Green Party announced that the National Minimum Wage (NMW) would be raised to £10 per hour by 2020 if they were to be elected. Labour’s pledge was to make it £8 per hour by the same year.

The image below, taken from Peninsula’s recent white paper on the minimum wage, the show’s that Labour’s pledge is really just more of the same, and the Greens’ would require quite a leap:

David Cameron mentioned in his conference speech that it would “soon” be £7 (it’s currently £6.50) and that anyone on the NMW would be excluded from tax altogether (thanks to a raising of the threshold from £10,000 to £12,500). But Lord Freud planted a time bomb at the Tory conference by saying at a fringe event (in response to a question from the floor) that some disabled people should be allowed to work for £2 per hour if they were willing to do it, on account of a perceived lower level of productivity. It exploded halfway through October and Lord Freud apologised after senior Tories disowned the comments.

What’s odd is that the policy had become roundly accepted by the mid-noughties, with parties on the left and right agreeing that under the influence of the Low Pay Commission, the NMW was not harming business and was protecting those it always intended to help from exploitation.

It seems now there’s a renewed appetite for politicians to use the NMW as a vote-winner. On the left, it’s presented as a tool for empowering the poor. On the right, it’s an example of the “nanny state” and anti-competitive – although it’s worth noting that this view isn’t represented in the centre-right. Basically, with a general election looming the parties are crystallising into “play to the choir” mode – although it has to be said that from the Greens to UKIP, there’s no official policy to abolish the minimum wage.

Peninsula’s white paper also takes you through the history of the minimum wage and details the exemptions and offset rules that most of us probably never knew about. You come away from it realising that the National Minimum Wage isn’t such a black/white left/right issue after all – and with a renewed realisation that it’s a policy that can’t be ignored.