The Budget contained little economic analysis of George Osborne’s sensational plan for a £9 minimum wage for the over-25s. Of course, it’s not driven by economics: the main objective is to destabilise the Labour Party. So far, the policy is being defended by Tories using rather flimsy logic: business moaned when Tony Blair introduced the minimum wage, but did that create mass unemployment? Eh, no. So we can ignore those who moan now; they’ll come around.
But, alas, things are a little more complicated than that.
The OBR has already broken the news the Living Wage helps richest households almost twice as much as poorer ones, because so many minimum wage workers are the spouses of high earners. Yes, all of this discomfits Labour. Yes, it provides political cover for Osborne as he cuts tax credits. But let’s not pretend that the Living Wage is a great progressive reform.
But no one has really asked how much of the workforce will, under Osborne’s new plan, have their wages set by the government.
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