The Living Wage Foundation has designated this week as Living Wage Week, with the aim of spreading a broader awareness of the measure and what it fights for: the right to a decent standard of living (Ainsley, 2016).
Its launch coincides with the announcements today of the recommended living wage, as part of the voluntary living wage scheme, being instituted by civil administrations in London, Scotland and Wales along with a number of major firms (Living Wage Foundation, 2016) - the actual Living Wage, higher than the government's 'National Living Wage'.
At a time of rising prices and economic uncertainty, an increase in pay will be a very welcome boost for many of the most vulnerable and those facing hard times. But the idea of minimum wages has been controversial in economics. There are sore divisions over the idea of an intervention through the law to 'artificially' raise wages.
For those on the neoliberal economic right, setting minimum wage thresholds are an artificial inflation of the costs of business, where costs are seen as the primary problem. From their view, the priority should be to reduce costs, so to increase competition, and through both together to reduce prices - allowing market-set wages to go further (The Economist, 2015).
On the interventionist economic left, there has been a delicate negotiated balance to strike. With trade unions for instance, there is a need achieve better returns for workers on the one hand, while also ensuring the long term affordability of pay so as to avoid future closures and lay offs.
What particularly concerns both Left and Right is that business, faced with wage inflation, may decide they have little choice but to begin to replace many basic low pay jobs with cheaper automation (The Economist, 2015{2}).
It is absolutely clear that it is just that people get proper returns for a their labour. And further, it makes sense. The OECD has stressed that economic inequality hurts economic growth and therefore the general prosperity (OECD, 2014). That makes measures of redistribution from shareholders to workers, and a fairer distribution of the 'rewards' between them, essential.
However. There can be no complacency. An economy is an intricate web and pulling at one string has knock on affects for the whole network - especially when progressive administrations are not the only ones pulling strings that have decisive results. To achieve the aim of a decent standard of living, just wages must be seen as an integral part of a broader policy of reform, which must look also to the other side of the equation: the cost of living.
In two key sectors, in housing and in energy, high costs have a devastating impact on the economy and the lives of all citizens, especially the most vulnerable. A secure wage goes hand in hand with secure housing and affordable energy - a Living Wage needs the companionship of a Living Rent.
The third aspect of any broad progressive economic policy has to be tackling the thoroughly unequal distribution of power over economic decision-making. Too much decision-making power is concentrated in the hands of too few, creating vested interests inclined to behave like cartels.
Only with all three together - giving citizens the guarantee of a reasonable reward for work, the security of basic housing and energy, and enfranchisement in the making of economic decisions - can the economy serve the needs and wishes of citizens rather than just those of narrow and self-serving interest groups.
And, as a final note, the fear of automation must at some point be addressed. With it, there will also need to be an assessment of our attitudes to welfare, to how work is rewarded, and even our definition of work itself. Above all pursuing one goal: that progress should serve citizens, not disinherit them.
References
Claire Ainsley's '1/3 of families earn less than they need for a decent standard of living'; from the Joseph Rowntree Foundation; on Twitter; 31 October 2016.
'New real living wage rates announced for London & the UK'; from the Living Wage Foundation; 31 October 2016.
'Minimum Wages: A reckless wager - A global movement toward much higher minimum wages is dangerous'; in The Economist; 25 July 2015.
'Minimum-wage mania'; from Money talks, in The Economist; 21 July 2015{2}.
'Inequality hurts economic growth, finds OECD research'; from the OECD; 9 December 2014.
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