When Chancellor George Osborne established the National Living Wage in 2015, it set in motion two competing narratives.
The re-branding of the previous Labour Government’s minimum wage led to big rises in wages for millions of the Ƶ’s lowest paid workers, not something that had previously seemed to be at the top of Mr Osborne’s political agenda.
But it also led to a conflict with the Living Wage movement that is ongoing to this day, thanks to the two measures having effectively the same name.
Mr Osborne’s first National Living Wage came into effect in 2016 at £7.20 an hour, since then the official figure for the lowest companies can legally pay has been lower - though getting increasingly closer - to what campaigners took to calling the “real living wage”, a figure calculated to match what is needed for a job to support a basic standard of living, covering basics such as food, rent, and childcare.
Eight years (and, alarmingly, seven Chancellors) later, Rachel Reeves has been the latest to hail a rise in the National Living Wage, saying its 6.7% increase to £12.21 an hour next year marks a “significant step” towards delivering on Labour’s manifesto promise to introduce a “genuine living wage for working people”.
The increase, recommended by the Low Pay Commission, will mean an extra £1,400 a year for a full-time worker earning the main minimum wage rate from next April, though that increased cost - coupled with higher rates of employers’ national insurance contributions - has sparked concerns from organisations representing some small businesses.
When the proposed increase was announced Baroness Philippa Stroud, chair of the Low Pay Commission, said: “The Government have been clear about their ambitions for the National Minimum Wage and its importance in supporting workers’ living standards. At the same time, employers have had to deal with the adult rate rising over 20% in two years, and the challenges that has created alongside other pressures to their cost base.
“It is our job to balance these considerations, ensuring the NLW provides a fair wage for the lowest-paid workers while taking account of economic factors. These rates secure a real-terms pay increase for the lowest-paid workers. Young workers will see substantial increases in their pay floor, making up some of the ground lost against the adult rate over time.”
Meanwhile, the campaign to make the “real” living wage match the Government figure carries on. In what has been designated Living Wage Week, the Living Wage Foundation, which has been campaigning on the issue since 2011, has called for the rate to be increased to at £12.60 an hour (slightly higher in London), saying that level of pay is what is needed to meet people’s everyday needs.
And despite those business concerns, David Van der Velde, argues that the North East should push for greater take-up of the real living wage.
He said: “With devolution in the North East and Tees Valley, we now have a great opportunity to start thinking in a joined-up way about how business, civil society and communities can work together to grow the economic and social resilience of our region and deliver a Living Wage for the North East.”
Joining the effort, the Tyne and Wear Citizens organisation is pursuing a complementary “Living Hours” campaign to address the plight of people trapped in insecure work, unable to get guaranteed hours of employment to meet every day needs. Its analysis suggests that almost 20% of Ƶ workers are in low-paid, insecure jobs, with a big rise in zero-hours contracts in recent years.
This week an event was held at which more than 100 civic and business leaders from around the region gathered to hear from North East mayor Kim McGuinness and speakers representing Living Wage accredited companies including Sage, Newcastle Building Society and Go North East.
Ms McGuinness said: “The Living Wage is a vital tool in our fight against low pay and poverty in the North East, and to create real opportunity for workers and families across the region.
“I look forward to working with the Living Wage Foundation, its accredited members and more employers to make the North East a Living Wage region. I’d urge employers to embrace the Living Wage, so together, we can ensure work provides a route out of poverty, so more people can fulfil their potential, and we become the home of real opportunity - with good work and decent pay at its heart.”
