Twenty Years of the National Minimum Wage

The first minimum wage, brought in by the Liberal government as part of a programme of reforms between 1906-1914, only applied to certain groups of very low-paid workers. The idea was to both undermine the young parliamentary Labour Party and bind it to the Liberals (which it did) and ward off the mounting militancy of the working class (which it did not: see The Great Unrest on leftcom.org). In 1909 the Trade Boards Act brought together bosses and unions to agree a minimum wage for four low-paid ‘sweated’ trades with predominantly female workers: chain-making, ready-made tailoring, paper-box making, and the machine-made lace and finishing trade. Over the years the Trade Boards expanded and morphed into Wages Councils which survived until the 1980s when Thatcher’s Conservatives moved to dismantle them. The 1993 Trade Union Reform and Employment Rights Act removed the remaining minimum wage protection for some 2.5 million workers by abolishing the last 26 Wages Councils.

The dismantling of the Wages Councils was part of the wider dismantling of the post-war industrial economy as capitalism’s cyclical crisis returned to undermine the complacent Keynesian set-up. And, as in any capitalist crisis, it was – and still is – the working class who pay the price. Restructuring or more often, in the UK, simply the abandonment of vast swathes of heavy industry and manufacturing involved sweeping job losses which destroyed the means to live and a way of life for millions, with no clear prospect of an alternative. The birth of the ‘new economy’ was accompanied by a sharp rise in self-employment, ‘gig’ working and a general move to individual ‘work contracts’ while as we all know, the rich got richer and the rest of us got poorer. Using the Joseph Rowntree Foundation’s definition, the percentage of the British population living in poverty rose from 13.7% in 1979 to 25.3% in 1996/97. By this point even the capitalists were getting worried – how can consumer capitalism survive if a quarter of consumers can’t afford to buy?

Minimum Wage

So in 1997 a new Labour government set out to “sensibly set a national minimum wage” into law. It became a legal requirement from 1 April, 1999. Reformists focus on the fact that the steep increase in poverty has reduced over the last twenty years. The fact is though that according to figures released by the Department for Work and Pensions last year, after factoring in housing costs, the portion of people in relative poverty was unchanged at 22%. Since the 2008 financial crash, average real wages are still not back to their pre-recession levels. In other words, the statutory minimum wage has not, and cannot, combat the creeping impoverishment of the working class as a whole. And here is the nub.

Since the new financial year in April wage workers between the age of 21 and 24 are entitled to a minimum of £7.70 per hour, with those over 25 entitled to a minimum of £8.21 per hour (younger workers are entitled to less, down to apprentices who are legally due £3.90 per hour!) – and it’s not enough. The Living Wage Foundation says the wage level needed to “meet the costs of living” is £9 an hour across the UK and £10.55 an hour in London. But this really is adding insult to injury, and goes nowhere near addressing the scale of the problem.

Minimum Existence

At the end of March, while MPs were engaged in the Brexit pantomime, the Department for Work and Pensions issued a tranche of new data on living standards in the UK. They confirm that there was no growth whatsoever in real incomes last year. This means that however ‘poverty’ is defined it’s on the increase and is shaping working class lives from the cradle to the grave. Over 4 million children – almost one in three – are now officially classed as ‘poor’. It’s also widening the gap in life expectancy between richest and poorest areas in England and Wales, partly because women who live in the poorest 10 per cent of local authorities are dying younger.

As for the minimum wage, more and more employers are ignoring it. Like the early days of the 19th century factory inspection system, the UK’s enforcement bodies are understaffed (the International Labour Organisation recommends one inspector per 10,000 workers; in the UK its one inspector for every 20,000 workers). Not surprising then, that more and more ‘abuses’ are going unpunished and more workers are finding they don’t get the minimum wage. Culprits range from garment factories in Leicester, to farmers and agribusinesses employing casual agricultural workers, shellfish collectors, nail bar workers, car washes, through building sites, hotels, and social care (see the last Aurora for the crisis in elderly care on leftcom.org).

Our aim here is not to propose reform of the national minimum wage. The only way the declining outlook for the working class can be reversed is to take the road of class struggle: not for a ‘fair day’s pay’ but for the abolition of the wages system.

The above article is taken from the current edition (No. 47) of Aurora, bulletin of the Communist Workers’ Organisation.