The UK’s largest trade body has called for the minimum wage to rise to £15 by October 2022. That’s up from the current rate £9.50 for adults over 23, with lower rates for younger workers and apprentices.
As part of its package of measures to deal with the cost of living crisis, the Trade Union Congress (TUC) is also calling for the minimum wage to be increased by this October; as opposed to April next year when the uprating is due. Unions are already fighting for £15 in workplaces up and down the country and “its time employers paid up”, said the TUC.
“Millions of low-paid workers live wage packet to wage packet, struggling to get by. And they are now being pushed to the brink by eye-watering bills and soaring prices,” said TUC General Secretary Frances O’Grady. “Ministers promised a high wage economy time and time again, but they need a real plan to deliver it – not just a convenient political slogan.”
As workers struggle to stay afloat, it is clear that higher wages have to be at the heart of the UK’s economic strategy, according to the TUC. “We need to transition the economy to high-wage, high-skilled and secure jobs. And shift our economic model away from a reliance on low-paid and insecure work,” highlighted the TUC.
MINIMUM WAGE HISTORY
The minimum wage began life in 1999 against a backdrop of opposition from Tories, business groups, and even some economists. Since then, the TUC has delivered pay increases for the lowest paid workers, without causing job losses. There is now a widespread consensus in favour of the minimum wage, across academic experts and across political divides.
Workers are living through the longest and harshest wage squeeze in 200 years, but it hasn’t always been like this. Up until the financial crash, wages saw sustained growth in every decade. This wage stagnation has held the minimum wage back, because the wage floor is explicitly tied to median wages.
RETURN TO NORMAL WAGE GROWTH
The government must deliver a return to normal wage growth so workers “get proper pay rises for the first time in over a decade”, urged the TUC. “We need to see sustained pay growth, year on year, so that median wages reach £20 an hour as soon as possible. This will underpin our £15 minimum wage.
According to the TUC, the government can make wage growth happen by delivering:
- A macroeconomic approach which boosts demand and creates growth.
- A plan to strengthen and extend collective bargaining across the economy including introducing fair pay agreements to set minimum pay and conditions across whole sectors.
- A life-long learning and skills strategy to fill labour shortages, boost productivity and so workers can update their skills throughout their working life.
- Corporate governance reform to prioritise long-term sustainable growth, rather than short-term focus on shareholder returns.
- Industrial and trade policies to promote good jobs and ensure that businesses compete on a level playing field.
- Making decent jobs a requirement of all government spending and procurement.
MINIMUM WAGE TARGETS
Secondly, the TUC believes government should raise its target for the minimum wage. The current target is 66% of median wages by 2024. The obvious next step is 75%.
Since it was introduced, the minimum wage has increased as a proportion of the median wage. The wage floor was introduced at 47% and is now on its way to 66% by 2024. As unions predicted, the evidence continues to show a positive effect on wages and no job losses.
“The government should set its next target at 75% of median wages and make progress towards this,” noted the TUC. “The Low Pay Commission should be responsible for the path based on consultation and negotiation through its social partnership model which brings together unions, and independent experts. This model provides an effective way to make sure we can keep the minimum wage rising over time.”
FAIR PAY AGREEMENTS
If the TUC’s plans are implemented, the country will get:
- A return to normal wage growth getting average wages up to £20 an hour.
- A 75% minimum wage target establishing a £15 an hour minimum wage.
“This must be delivered as soon as possible,” urged the TUC. “A government that is serious about wage growth will be able to get us there.”
Trade unions will also play a key role in getting wages to these levels more quickly. Workers in unions will see bigger pay rises. And in sectors with good collective bargaining coverage, a £15 floor will be implemented earlier. Fair Pay Agreements, common in neighbouring countries like Germany, France, Belgium and Sweden, should be rolled out, and anti-trade union legislation should be repealed, so workers can win higher pay ahead of the minimum wage, concluded the TUC.
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