Wednesday, 29 December 2010

UK Minimum Wage "Manifestly Unfair"

The Council of Europe's Committee of Social Rights has published an assessment on its 47 member states' progress on the European Social Charter, which was initially signed by ten founding members in 1961. This commits signatories to providing various social and legal protections, such as health, housing, recourse to the law and employment rights.

The conclusions the report makes on employment in the UK makes grim reading for workers and trade unionists. Here are the lowlights.

On annual holiday with pay: "The Committee concludes that the situation in United Kingdom is not in conformity with ... the Charter on the ground that workers who fall ill or are injured during their holiday are not entitled to take the days lost at another time."

On weekly rest period: "The Committee concludes that the situation in the United Kingdom is not in conformity with ... the Charter on the grounds that there are inadequate safeguards to prevent that workers may work for more than twelve consecutive days without a rest period."

On increased remuneration for overtime worked: "The Committee concludes that the situation in the United Kingdom is not in conformity with ... the Charter on the grounds that workers do not have adequate legal guarantees ensuring them increased remuneration for overtime."

On trade union activities: "The Committee concludes that the situation in the United Kingdom is not in conformity with ... the Charter on the ground that Section 15 of the Trade Union and Labour Relations (Consolidation) Act 1992, which makes unlawful for a trade union to indemnify an individual union member for a penalty imposed for an offence or contempt of court, and Section 65 of this Act, which severely restricts the grounds on which a trade union may lawfully discipline members, represent unjustified incursions into the autonomy of trade unions."

On the right to take collective action: "The Committee concludes that the situation in the United Kingdom is not in conformity with ... the Charter on the following grounds:
 the scope for workers to defend their interests through lawful collective action is excessively circumscribed;
 the requirement to give notice to an employer of a ballot on industrial action, in addition to the strike notice that must be issued before taking action, is excessive;
 the protection of workers against dismissal when taking industrial action is insufficient."

Perhaps most damning is the committee's conclusions on "
the most successful policy of the last 30 years", the minimum wage. It's worth quoting this section of the report verbatim:

Paragraph 1 - Decent remuneration
The Committee takes note of the information contained in the report submitted by the United Kingdom. In its previous conclusion the Committee held that the situation was not in conformity with Article 4§1 of the Charter on the ground that the minimum wage fell far below the threshold of 60% of the average wage.

It now notes from the report that in 2008 the adult rate of the UK National Minimum Wage (NMW) amounted to £5.73 (€6.90) gross per hour. According to the report the NMW has increased substantially faster than both average earnings and prices, especially since 2001. Since it was introduced in 1999, it has risen by around 59% up to October 2008. The Government takes advice on NMW rates from the independent LowPay Commission. The aim when setting the rates is to help the low paid through an increased minimum wage, while making sure that no damage is done for their employment prospects by setting these rates too high.

As regards the minimum wage as a per cent of median earnings (the so called NMW bite), the Committee observes from the report that it is higher in low paid sectors such as hotels and restaurants, cleaning, hairdressing etc. On average, in all sectors it represented around 50% of the median wage in 2008. The report also describes the system of tax credits which aims at achieving fairness combined with flexibility in the labour market. The Committee observes that when combining the NMW with tax credits, a single person in October 2009 earned £197 (€237) per week.

The report does not provide information on the average wage. The Committee notes from Eurostat that the average gross annual earnings in industry and services in 2007 amounted to € 46,050. The Committee notes from OECD2 that the minimum relative to average wage of full-time workers represented 46%.

Taking all elements at its disposal into account, the Committee still considers that the situation is not in conformity with the Charter. Despite a number of efforts aimed at improving the overall situation of minimum wage earners, and notwithstanding the fact that the pound value of the minimum wage has gone up during the reference period, this wage remains low and cannot be considered fair in the meaning of the Charter.

The Committee concludes that the situation in United Kingdom is not in conformity with ... the Charter on the ground that the minimum wage is *manifestly unfair* [
my emphasis]"

You can read the full UK report

Shamefully, the UK was one of the ten founding signatories of the social charter. Some progress.

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TGR Worzel said...

I have a couple of thoughts on this.

1. What's unfair is the way that anybody on the minimum wage can't keep up with the cost of living. Inflationary pressures in things like gas, electricity, water, and Council Tax immediately outstrip any benefit we might see from the occasional rise, leaving us even worse off than we were before. It doesn't help that Council Tax increases don't feature in the inflation figures and the effect of astronomical prices increases in Gas, Electricity, Water are softened by the effect of falling prices elsewhere, on things like electrical goods and foreign holidays that anybody on the Minimum Wage isn't really likely to be buying...!

2. And it is my experience that many employers tend to think of the National Minimum Wage as the National Maximum Wage, i.e. that's all they're obliged to pay so that's all they're going to pay, irrespective of the skills and experience required to do the job. Certainly so far as their employees are concerned. When it comes to the employers own remuneration, its a different story...

Loz said...

It's worth remembering that up until very recently there was NO minimum wage and the Tories fought against it being introduced at all. I find peoples memories, both on the left and the right, to be astonishingly lacking in this major detail. It may be low but it's better than the pre-minimum wage exploitation that used to go on - teenagers on 50p an hour for washing dishes in the booming mid-90s being a case in point.

This report is interesting but all it will do is add fuel to the already raging fire that we must "get out" of Europe.

The Tories would love nothing more than to tear up the Social Charter and reduce workers rights to virtually nothing on the basis of the political lie that "the market" will sort everything out. They are already floating the idea of restricting union laws ever tighter and raising the time threshold for unfair dismissal claims, so the journey they want to travel has already been set out.

The introduction of the minimum wage, maximum working hours and the first ever legal right to paid holidays only came in, through a Labour government, because of the European Union.

It's very important this is acknowledged and remembered by socialists who rant and rave about getting out of the EU. I'm not saying we must all become raving federalists, but we must stop dancing to the tune of the reactionary right on the question of Europe.

Phil said...

TGR, for once we see eye to eye on something! Had the minimum wage not been brought in it sends a shiver down my spine to think how low the incomes of the low paid would be.

While I agree with you Loz re: attacks on the minimum wage, I think we've got to the point now where its abolition is politically unthinkable. If the Tories ever came for it the recent student demonstrations would be akin to a polite tea party in the grounds of Buckingham Palace.

I think we shouldn't be afraid of arguing for a higher minimum wage on the grounds the right could turn it against us. Already many workers on it have their incomes topped up by tax credits and other forms of income support. There is a case here for turning the right's arguments against them: we can argue why should tax payers subsidise employers who won't pay a decent wage.

Re: the Europe stuff, the Council of Europe and EU are separate organisations, though of course the right are only too happy to blur the distinction. I think the left should aggressively defend the social rights the EU promotes rather than painting it a straight neoliberal institution.

claude said...

And in fact, with the new yearmore news of transport fares, amongst many other things, going up way faster than inflation which in turn is going up way faster than wages.

Anonymous said...

The only reason people end up working for 12 days in a row without a day off is because during busy periods employers are taking full advantage of the clever phrasing of the EU weekly rest law (1 day off in .each. 7 day period) and giving you a day off on sunday which is the first day of the rota and then giving you a day off at the very end of the next rota week.

In theory employers could give you three days off in each 7 and you'd still end up working 8 days in a row.