Chief Executive's Blog: Living Wage: The Role of the Low Pay Commission

This week we launched our Local Shop Report, and it was great to see so many of you in Manchester to be among the first to get the information and to have the chance to discuss it with colleagues in the industry.

One of the chapters in the report looks at employment in our sector, and this year we reached 400,000 staff working in local shops.  I very much hope that we see that number rise next year, but I fear that jobs in our sector are going to come under more pressure than ever due to the introduction of the national living wage.

Let me deal first with the “moral” issues that are associated with the introduction of a £7.20 minimum for over-25s from next year, rising to over £9 by 2020.  George Osborne’s master stroke has been appropriating the term “living wage” for this policy – how can you oppose people being paid enough to live?  Of course the national living wage is nothing of the sort, it’s a supplement to the national minimum wage.  Taking all the emotion out of it, there are two unambiguous decisions for government:

  1. Should there be a floor below which wages cannot fall? ACS thinks there should be.
  2. What should this floor be? This decision isn’t an ethical dilemma, it’s a policy decision which should be based on evidence.

This is why the most important part of the national living wage policy is who sets the rate, because politicians deal in judgements of values, presentation and party strategy.  Professional economists (should) deal in facts, with their judgements based on independent projections.  Wouldn’t it be good if we had a body set up to do this analysis and make these judgements?

And of course we do, it’s the Low Pay Commission.

To me, this issue doesn’t start with being for or against a national living wage, it’s about whether decisions that impact on hundreds of thousands of businesses and millions of staff should be driven by evidence or by politics.  Let’s have a national living wage, and if there should be a different rate for over-25s, so be it.  But let’s allow the Low Pay Commission to set that rate and all the minimum rates of pay for people in the UK.  We may not always agree with their decisions, but at the moment businesses – and there are more and more firms and sector representatives now describing the enormous impact of the national living wage on jobs and investment – have no faith in the process for setting these rates.

We will be submitting evidence to the Low Pay Commission, which has seen its remit slashed to just recommending rates for under-25s and to advising on the timing of national living wage increases.  The right thing – morally, economically and also, in fact, politically – is to extend their remit and to put evidence at the heart of one of the most important policy decisions facing businesses for decades.

This entry was posted by Victoria on Mon, 14/09/2015 - 11:51