James Forsyth James Forsyth

Labour seeks business support for faster increases in the minimum wage

With Labour conference next week, a letter has gone out to business people from Alan Buckle, the senior accountant who Ed Miliband appointed to look at how to boost the minimum wage, asking them to sign an open letter ‘calling for the minimum wage to rise faster in the years to come than it has in the recent past.’. Patrick Wintour reports that the chief executives of Kingfisher and Nomura are among those who have signed. This letter appears to be a prelude to a conference commitment to a further above inflation increase in the minimum wage.

Buckle writes,

‘I hope you don’t mind me contacting you out of the blue. I’m getting in touch to see whether you would be interested in supporting an open letter from business leaders on the issue of low pay.

In preparation for our two separate reports into how to tackle the problem of low pay earlier this year, Sir George Bain and I came to the conclusion that the time has come for measures to strengthen the minimum wage.

All three political parties have expressed concerns about the level of the minimum wage over the past year, and we think the business community should also signal its commitment to the public to work towards a more productive, higher wage, higher skill economy.

While care must be taken to retain flexibility in the face of economic shocks and avoid an adverse impact on employment, our analysis suggests that more can be done to ensure that the lowest paid in society benefit from the recovery. This is also an opportunity to improve public finances by reducing reliance on tax credits.

The letter is calling for the minimum wage to rise faster in the years to come than it has in the recent past.

I’ve copied the letter below, and would welcome your support – we are signing in a personal capacity.’

What Buckle wants them to sign, though, is hardly controversial. A Tory source told me, “The Conservative Party could sign this letter – we agree with every word. While there is more to do, our long term economic plan is securing the recovery, meaning we have been able to afford the first above-inflation minimum wage rise since Labour’s Great Recession began.”

The full text of the open letter is below:

The economy is growing. Business confidence is returning. And as the recovery takes hold, we must ensure that all employees are benefitting – and especially the lowest paid in society who find it hardest to make ends meet.
The challenge for employers and business owners is to invest in growth that creates more well-paid jobs and opportunities to progress. To deliver this requires long term investment, certainty from government, and improvements in the skills we need to succeed.

We also share concerns that the value of the minimum wage has fallen in recent years.

Over the last 15 years, the National Minimum Wage has been successful in boosting pay at the bottom of society without leading to a loss of jobs. For businesses, it has created a level playing field, enabling employers to improve business performance and staff conditions without fear of being undercut by companies competing on lower wage rates.

The Low Pay Commission was right to be cautious during the economic downturn. Now, as the economy recovers, we believe the minimum wage should rise faster than it has in the recent past. A stronger minimum wage will benefit businesses, improve public finances, and help tackle low pay.

 

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