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Employment

£15 minimum wage: Who is calling for it and could it happen?

Calls for a £15 minimum wage have increased as inflation causes wages to stagnate. But is it feasible? Here’s everything you need to know.

With inflation already at 11 per cent and energy bills expected to hit £4,000 a year from January, much of Britain needs a pay rise to prevent in-work poverty from rising further. 

There has been a strong campaign to raise the minimum amount employers can pay their workers to the Living Wage Foundation’s independently calculated “real living wage” of £9.90 and £11.05 in London, but some are saying that is still not enough. 

The national living wage  – the legal minimum for those aged 23 and above – currently stands at £9.50 per hour, however the national minimum wage is lower, at £9.18 per hour for those aged 21 or 22. Employees aged 18 to 20 can expect to be paid a minimum of  £6.83, and those under-18 get £4.81.

Unions are leading the way in demanding the government find ways to boost the economy, with many throwing their weight behind the campaign for a £15 minimum wage. 

But is it economically feasible? We spoke to the experts on how a £15 minimum wage would work and what impact it could have on working people.

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Who is calling for a £15 minimum wage?

The Trades Union Congress has unveiled a “road map” plan to a £15 minimum wage in the UK, calling on the next prime minister to deliver a high wage economy as the country faces a deepening cost of living crisis.

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“Every worker should be able to afford a decent standard of living,” said Frances O’Grady, general secretary of the TUC. “But 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.”

The solution, according to a report laying out the proposals, is to set a new minimum wage target at 75 per cent of median hourly pay. To get to a £15 minimum wage, hourly median pay would need to rise from its current rate of £14.85 to approximately £20 an hour. This would see the minimum wage rise at a rate on par with average wages, making sure that those earning the least don’t fall too far behind. 

The TUC is calling on the government to work with the Low Pay Commission (LPC) to deliver this “as soon as possible” – with the roadmap detailing how this would be economically viable by 2030.

“Forcing workers to take the hit while the wealthy increase their wealth has led us into crisis after crisis,” write the report’s authors. “We need a new approach that puts workers ahead of wealth and a productive economy ahead of an extractive economy. 

Would Labour bring in a £15 minimum wage if it was in government?

Last year, union Unite put forward a composite motion to be debated at the Labour Party Conference, which, among other motions such as banning fire and rehire, calls for the minimum wage to increase to £15 per hour. It was passed unanimously.

The wide-ranging motion also demanded stronger union rights, higher taxes “on the very wealthiest”, an end to zero-hour contracts and a “better work-life balance”.

The £15 minimum wage section of the motion was submitted by the Bakers, Food and Allied Workers Union, and adopted by grassroots group Momentum into its eight proposals for the September conference. Former leader Jeremy Corbyn has also told the BBC that a £15 an hour minimum wage is something the party “should be supporting and campaigning for”.

Why are there calls for a £15 minimum wage? 

Increasing the minimum wage to £15 an hour would lift huge numbers of working people out of poverty, remove the burden of welfare from the taxpayer and create an environment for small businesses to thrive, according to grassroots movement Labour movement Momentum who are supporting the motion. 

Research published by the TUC and the High Pay Centre showed that the salaries of FTSE 100 chief executives had increased by almost 40 per cent in the last year, while many workers fight for pay to keep up with inflation.

It means bosses are now paid 109 times more than the median UK full-time worker, up from 79 times more in 2020 and 107 times more in 2019.

“We’ve got to be more ambitious in our approach towards the national minimum wage,” MP McDonald told PoliticsJoe.

“Ten pounds an hour is what we were talking about in 2014, 2015. The world’s moved on, prices are rising, we see every day the pressures working people are under.

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How much would £15 per hour be per year/ as a salary? 

Someone working 40 hours per week, and earning £15 per hour, would earn a yearly salary of £31,200 before tax or other deductions. 

For comparison, the average salary for ambulance staff (excluding paramedics) is £12.89. Legal secretaries earn on average £11.79 per hour and finance officers £13.58, according to Talent.com. 

The starting average salary for a teaching assistant is around £18,300, which breaks down to just £9.51 per hour in a 37 hour week – a penny over the legal minimum for someone aged 23 or over. 

So, not only would professions such as cleaners, waiting staff, and retail employees who have long been paid the minimum wage receive a hefty pay increase, so too would many in graduate level jobs.

Is a £15 minimum wage affordable for businesses to pay to their employees?

Think-tank the Progressive Economy Forum (PEF) claims to have done the maths in calculating how a £15 minimum wage would be affordable for the government to implement by 2024.

The researchers found that a £15 minimum wage would save the government £4.2bn on benefits payments that top up the wages of people on low-incomes, allowing it to cut taxes on small businesses, and raise an extra £30bn in taxes.

They argue that by lowering National Insurance Contributions for small businesses, the government would reduce their tax burden and compensate for the increase to the cost of wages. For larger businesses, they said “there is significant ‘slack’ available on their balance sheets to absorb increased labour costs.”

Co-author of the PEF’s report making the case for a £15 minimum wage, James Meadway, said that a £15 minimum wage by 2024 would make up for a “lost decade” of stagnating wages.

He also positioned the policy as a way to “Level Up” the north of England, which would boost the incomes of 51 per cent of employees in the area, compared to 33 per cent of workers in London. Across the country, 14 million people would see their pay increase under the proposals. 

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What impact would a £15 minimum wage have on jobs?

Given that more than half of the entire workforce of the UK earns less than £15 per hour at present, some have asked whether a £15 minimum wage would be fair.

Almost three in 10 employees were earning less than £9.02 an hour in 2021, with the average (median) hourly rate £14.10 per hour. This rose from £13.68 per hour in 2020 – an increase of just 3 per cent. 

The minimum wage is currently around 63 per cent of average hourly pay. In its plan for a £15 minimum wage, the TUC is calling for this “bite” point to be increased to 75 per cent. 

There are two key concerns for raising the minimum wage to such levels, Professor of Economics at LSE, Alan Manning told The Big Issue.

Firstly, if employers are unable to pay wages at the level mandated by the government, they will have to employ fewer staff, he said, leading to redundancies or a halt in hiring new workers. 

Secondly, Manning says it could impact on motivations to get jobs which require higher levels of training, skill or stress.

“Fifteen pounds an hour is probably more than what many nurses are paid, and they’ve gone through three years of training. If you suddenly say that any job pays £15 an hour, why is anyone going to train as a nurse?” Manning asked. 

“It’s risky in the sense that just because it sounds good, that doesn’t necessarily mean it’s going to be good in practice.” 

However, those campaigning for a £15 minimum wage “are not talking about the minimum wage today, they’re talking about aspirations for the future,” Manning added.

When could we see a £15 minimum wage?

The TUC has said that a £15 minimum wage should be in place by at least 2030, but needs to be brought in “as soon as possible” if the government is serious about getting wages rising.

James Meadway, director of the PEF described the plans as going in the right direction but added that “£15/hour minimum by 2030 is too late for low paid workers, and they shouldn’t have to rely on future economic growth to achieve it”. The PEF argues that a £15 minimum wage would be affordable for the government to implement by 2024.

The next general election is set for May 2 2024, and since Labour would not be in a position to make changes to the national living wage until then, it would be from this point that a £15 minimum wage could, hypothetically, be on the cards. 

“We will make an assessment of that, which I think is the responsible thing to do, closer to the general election” said Nick Thomas-Symonds, the shadow home secretary.

Ahead of the next general election, Labour would be willing to “make an assessment” of whether a £15 minimum wage is viable

The national wage will eventually reach £15, says The Resolution Foundation, however it is not an “an economically viable policy in the short-to-medium term.”

If the national minimum wage were to increase yearly 4 per cent – a fairly typical rate of increase for the minimum wage – it would reach £15 per hour by the mid-2030s.

“We’re basically saying that £15 is unviable in the short-term, and inevitable in the long-term,” a spokesperson told The Big Issue.

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