The din of political parties outbidding each other on promises to spend more on the NHS, education, transport infrastructure and housing has echoes of pre-austerity and even pre-Thatcher times. In a less familiar but no less noisy competition, both main parties are trying to persuade voters that they are committed to raising living standards by promising a significant rise to the minimum wage. We could well see a transformative assault on low pay in the UK.
As recently as 2015, the hourly national minimum wage was just £6.50. Today, for over-25s, it is £8.21. Promising to raise and extend this national living wage, as it’s now called, the Tories have a target of £10.50 an hour, paid to all over-21s, by 2024. Labour pledges £10 for all over-16s next year. These promised increases – to up to 40% in real terms above the 2015 level – represent a striking new feature of UK politics.
The UK came late to minimum wages, with the first national minimum wage introduced only in 1999. That was 30 years after France, 65 years after the US, and around a century after Australia and New Zealand.
Labour and the unions had feared a national minimum would undermine the collective bargaining system whereby pay deals were negotiated in individual occupations and sectors. Free-market Conservatives criticised public interference in the labour market and opposed the minimum wage at its inception. Yet 20 years later, their rhetoric promises nothing less than to “end low pay altogether”.
In trying to understand this phenomenon, it is worth asking where this new politics of pay is coming from, what exactly the present promises mean, and where it is all going.