As many of my long term readers are aware, I am a big supporter of the Living Wage, because I don't think pay is fair and the minimum wage isn't enough to get by on. However I'm not blind to the fact that there is a cost to raising wages, in any organisation the wage bill is always one of the biggest costs. So I'm interested to explore the options, the other week my suggestion that Penzance Town Council become a Living Wage employer was thankfully passed (blog here). In this case the cost didn't have a severe impact upon the budget of the council, but for bigger authorities and organisations how can it be done?
In the last week Ed Miliband has come out and announced the Living Wage as a key stone policy for the Labour party, congratulations to him I think one of the great mistakes of the Labour government was not keeping minimum wage in line with inflation. Throughout the period of the minimum wage, the gap between the lowest earners and the highest earners has dramatically increased as is well documented. The Liberal Conspiracy blog last year picked up research and stated: "According to calculations by think tank One Society, if NMW had kept pace with rises in top pay, it would already be £18.89 per hour."
I don't know the exact accuracy of the figures, but it's clear that there is trend from Labour's introduction of the minimum wage to this day, pay increases haven't been evenly spread and part of the reason the gap between rich and poor is widening. It's a good to see a u turn from Labour on taking responsibility for pay, I'm unclear as to why they're aren't committing to increasing the minimum wage instead but anyhow.
I'm not quite clear how their proposals will work and how the tax incentives to Living Wage employers will be paid for, presumably tax increases, but that's another matter. Today Cornwall Council are considering or at least debating whether the authority should be come a Living Wage employer. Rather depressingly last year (to the day) when I blogged Trim the top earners and pay a living wage, (now Mebyon Kernow policy) there were over 1500 people employed by Cornwall Council on less than the Living Wage, today apparently that numbers doubled to 3,131. Whether this is due to the fact the Living Wage has increased with inflation and council pay has stagnated or the Council are now employing cheaper staff is not clear. Anyway the cost reported in the Western Morning News is a minimum of £1,045,000. Notwithstanding that they accept my previous suggestion that the top earners (those above £100k pa) all take a pay cut, how do you pay for this? A million pound pays for a lot of services, close libraries, put up parking charges, perhaps here in Penzance pull out of Jubilee Pool? It's a real dilemna for those not willing to tackle the issue of high pay in Cornwall Council.
Out of interest there was an interesting piece in the Guardian about Islington Council, who did cut the top earners to pay for it a year ago, a must read also for their endeavours in tackling poverty in the community, an example I hope Cornwall Councillors and officers will look at: One year on, Islington's commitment to the living wage has not faltered.
Which brings me to Ed Miliband, if companies are to be offered tax breaks in order for the state to subsidise the Living Wage, what does he expect local authorities and government departments to do? It's really not clear from what I've seen that this has been given any thought by Labour. In fact it's hard to pin down any of Labour's policies or thoughts on local government funding. If in the eventuality that Labour wins the next general election, will they reverse this government's cuts? will they stump up over a million pounds to Cornwall Council on top to pay the Living Wage, as well as all the other local authorities, towns, parishes etc?