Is low pay the result of government policies?

By Bernadette Meaden
September 17, 2017

This week Robert Peston, ITV’s political editor, tweeted, “It is EXTRAORDINARY AND SHOCKING that unemployment falls to new record low of 4.3%, lowest since ’75, but real wages still falling”. Conventional wisdom dictates that when unemployment is so low wages should be rising. So why aren’t they?

I would suggest that what is truly extraordinary and shocking is that our government has systematically devalued the labour of its own population.

First, of course, there is the public sector pay cap, which has directly and deliberately suppressed the wages of around five million people. Public sector workers, because of the jobs they do in education, healthcare and the civil service, tend to be more highly trained and qualified than the general working population. When the pay of a significant and highly qualified section of the workforce is shrinking in real terms year on year, it creates an environment in which it is easier for other employers to resist any pressure for a pay rise.

Welfare reform has also played a very significant role. Benefit claimants are under threat of sanction and enormous pressure to take almost any job that is offered. Employers know this. So why should they offer decent pay and conditions when an unemployed person must either take what is offered or potentially face destitution? And for those already in work, pay cuts, pay freezes and worsening conditions are more likely to be accepted because workers know that to lose a job and be reliant on benefits is such a miserable and poverty-stricken existence.

There has also been the growing expectation that people will work for nothing, just to get the chance of a job, or just to keep their meagre Jobseekers’ Allowance. Large and profitable retailers have availed themselves of free labour courtesy of the DWP. When Cait Reilly  mounted a legal challenge against the DWP over being made to work for no pay in Poundland, she was referred to contemptuously by minsters as a ‘kid’ and a ‘job snob’ who thought she was too good to work in a supermarket. She was in fact a 24 year old geology graduate who later went on to get a paid job with Morrisons. But this disrespectful attitude, which expects people to be grateful for the opportunity to work for £57 or £73 per week must send a message to employers which devalues people’s labour.  

Insecure workers have little or no bargaining power, and the government has encouraged the growth of insecure work. It sells Universal Credit to businesses as the means to “provide your business with a more flexible workforce.” saying, “you’ll find it easier to fill temporary jobs”. Flexible and temporary means insecure, which means unlikely to command better wages or conditions.

This week, the Minister for Employment Damian Hinds said, “If there is no good reason that a Universal Credit claimant cannot take a zero-hours contract job they may be sanctioned for not doing so.” What constitutes a ‘good reason’ will no doubt be at the discretion of Jobcentre staff.  

The government has also strongly promoted self-employment, or ‘entrepreneurship’ as they like to call it. In recent years there has been much anecdotal evidence of Jobcentres encouraging people to ‘go self-employed’ if they had any skill or ability that could conceivably make money. Every person who went self-employed was another person off the unemployment figures, even if they had to claim tax credits and housing benefit to survive. Indeed, the boom in self-employment, far from being the entrepreneurial renaissance that the government likes to suggest, is in fact another major contributor to low pay, with 80 per cent of self-employed people living in poverty. And again, it is easy for employers to keep wages down if they know, and their employees know, that they can get a freelancer, who would be glad of the work, to do a job for less.

The government has also strongly promoted Apprenticeships. Of course, Apprenticeships with high quality training leading to decent jobs on which people can build a life are a great opportunity. But there is much evidence that apprenticeships are being used as a way of not paying the minimum wage. Again, this creates an environment where people are persuaded that they are actually lucky to get minimum wage, and minimum wage becomes not a minimum but something to which a worker must aspire.

A stark example of this was revealed recently by the GMB union. Due to budget cuts, thousands of teaching assistants have lost their jobs in recent years, but we are now seeing teaching assistant apprenticeships being advertised. The union analysed 190 of these advertised vacancies, and found that 75 per cent were being offered £3.50 per hour. A special school with 200 pupils was advertising nine of these apprenticeships at £3.50 per hour, and the average hourly rate across all 190 vacancies  was £3.81.

Andy Prendergast from the GMB said, ”Apprenticeships can be a valuable route into the world of work, but too often they are used to exploit young people and provide cheap labour for employers. In many of these adverts it’s not even clear what training, if any, is actually provided – raising serious questions about these schemes are delivering what they promise. These shocking figures expose how weak the regulations governing apprenticeships really are…there are real fears that apprentices will be left to fulfil tasks that should be carried out by experienced professionals.” 

In 2015 David Cameron announced his plan to create 3 million new apprenticeships.

So – that’s 5 million workers employed by the government who haven’t had a real pay rise for years, and a policy to create 3 million apprentices for whom minimum wage is something to which they can only aspire. With 32 million people employed in the UK, that would mean a quarter of the workforce either paid below minimum wage, or having their pay suppressed, by deliberate government policy. Perhaps the reason for falling wages should not be such a big mystery after all.

What the government has managed to do is, as Robert Peston says, extraordinary. It has for a time negated the law of supply and demand, and made low pay and low unemployment two sides of the same coin. It has been so determined to get people off the unemployment register, by any means necessary, it has created a market where labour is cheap, workers are not respected, and employers could legitimately advertise millions of vacancies at below minimum wage.  There really is no mystery here, just a government with a political ideology which actually devalues and disrespects its own working population.


© Bernadette Meaden has written about political, religious and social issues for some years, and is strongly influenced by Christian Socialism, liberation theology and the Catholic Worker movement. She is an Ekklesia associate and regular contributor. You can follow her on Twitter: @BernaMeaden



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