Cameron urges employers to pay living wage

Employers are coming under greater pressure to pay their staff the living wage following a statement by Prime Minister David Cameron urging them to do so.

However, Labour leader Ed Miliband claimed the Prime Minister's words lacked credibility and reiterated his promise to raise the minimum wage to £8 per hour by 2020.

The exchange between the two leaders may be the start of an election build up by the pair focusing on living standards and increasing low pay.

It also came just days before new figures from the Joseph Rowntree Foundation (JRF) revealed the depth of recession's effect on those earning at the lower end of the wage bracket - and prompted the charity to call on employers to pay the living wage.

Speaking on his trip to the United States, Cameron told reporters that he wanted to see companies' success passed through in terms of wage increases.

 "It has to be done in a way that's affordable, and in a way that companies can continue to grow, we need to see productivity increase."

 He added that firms "that can afford to pay the living wage should".

 However, Miliband responded at a Fabian Society conference on the weekend.

 According to the BBC he told delegates that Britons would not believe the Prime Minister's feelings were genuine.

"They have denied the cost of living crisis. They have been woefully out of touch with the daily struggles of families," he said.

"They have rubbished the idea that people are worse off. Even this week, George Osborne was saying we were set under him to be 'the richest country in the world', and that his economic victory is complete.

 "But we wake up this morning to hear that the prime minister thinks 'Britain needs a pay rise'. People across the country will have been choking on their cornflakes."

The Labour leader also repeated his pledge to limit the National minimum Wage to £8 an hour by 2020 under a Labour government.

The Joseph Rowntree Foundation's Households below a Minimum Income Standard 2008/09 to 2012/13 report highlighted how badly certain parts of the population had been hit by the after-effects of the recession.

 It revealed that the risk of having insufficient income rose for all groups during the period, although this risk was not distributed evenly across different household types.

 In the first part of the period young working-age adults living alone were worst hit.

But since 2010, the report noted that "continuing wage stagnation has combined with cuts in benefit and tax credit entitlements to the detriment of living standards; this has had an especially strong impact on families with children".

 To address the widening gap, JRF called for:

  •  Reform of the markets for essential goods and services eg. energy, financial services and transport, to ensure they provide good value for money and those on low incomes don't pay more than better off households for services (the so called ‘poverty premium'),
  • National minimum wage rates to be set with regard to the changing cost of living and average earnings,
  • Employers to pay the Living Wage where they can afford to,
  • Changes to the design of Universal Credit so that low earners keep more of the money they earn before benefits are withdrawn.

More than 1,000 employers now pay the living wage and consultant KPMG warned that failing to address the low pay society could result in a lost generation.

Posted: Tue 03 Feb 2015
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