Borgen solves the Minimum Wage issue: Don’t have one

I’m only just getting my head around how, here in Britain, our tax money pays an army of private landlords £35 billion a year in rent.  In fact, this is so common that the Government has invented a euphemism for it: Housing Benefit.

And now I discover that, on top of that, we also foot £24 billion worth of the wage bill of thousands of large companies, who are too stingy to pay people a proper wage. And get this, there’s a euphemism for that as well: Tax Credits.

So, the British welfare system is working really well. For landlords and supermarkets.

Shurely shome mishtake? A quick perusal of the Oxford dictionary confirms that a welfare system is a system whereby the state undertakes to protect the health and well-being of its citizens, especially those in financial or social need, by means of grants, pensions, and other benefits.

I don’t know about you, but I don’t seem to run into a lot of landlords in financial or social need these days, and I don’t think Tesco or Asda are short of a bob or two. (Other Supermarkets are available). But do any of them pay the minimum wage – let alone a Living Wage?

Before we go on, let’s get this straight: A Minimum Wage is a wage below which wage offers become seriously embarrassing for employers (or ought to, at any rate). It is illegal to pay any staff below this level. A Living Wage is a slightly higher wage, which you can – almost – live on.  It has no legal status. It applies to both the private and public sector. Interestingly, all the London Councils who currently pay a Living Wage are Labour controlled. Go figure.

To be fair, the practice of treating staff as some sort of necessary inconvenience is not confined to the big sharks. With almost one in five UK workers earning less than the living wage, in Business Britain they’re all it like the clappers.

The Low Pay Commission, which recommends minimum wage levels, estimates that more than 100,000 adults receive below the legal rates – and the actual figure is probably considerably higher because of under-reporting of the problem. The TUC believes that between 250,000 and 300,000 employees could be unlawfully denied the minimum wage.

But instead of going after these bar-stewards with every law in the land, what do we do? We ask the tax payer to subsidise the employers! With £24billion worth of tax credits. That’s one hell of an eye-watering shortfall. And yet, just eight criminal prosecutions for non-compliance have been mounted in 13 years of the Minimum Wage’s existence.

No wonder we’re skint!

I mean, who can afford that sort of largesse in a recession? Put those two euphemisms together and we could have met half of our national deficit. And if all the landlords (£550mn) and Vodafone (£6bn), Amazon (£??bn), Starbucks (£??bn) et al actually paid their own tax, we’d be quids in. End of austerity! Whoop!

A pretty shocking state of affairs. So, What Would Borgen Do?

As this is a post about the Minimum Wage, let’s park Housing Benefit for now. We can pick that up in another post when the next avalanche of evictions hits the streets and the headlines. Which it will.

Sadly, Borgen can’t claim to pay the top minimum wage in Europe. That gong goes to Luxembourg with  €1801 (£1523) a month (€1264 or £1082 in Britain). As a complete coincidence, the Principality of Luxembourg also happens to be the country where all those aforementioned tax avoiders claim to have their “HQ”. Little wonder that “Deluxembourg”  can easily afford to pay everyone a decent living wage.

But there’s good reason for Denmark not coming top of the Minimum Wage tree. They don’t have one. That’s right, Borgen actually doesn’t set a Minimum or even a Living Wage.

What the ….??!!

The happiest, most progressive, most equal-politically-correct-right-on-OK people in Europe don’t have a Minimum Wage?!  Well no, they don’t. Instead, a “low acceptable wage level” is negotiated between unions and employer associations. The average minimum wage for all private and public sector collective bargaining agreements currently stands at 109 kroner per hour (£12.52). In Britain it’s £6.19 – less than half that.

What? So the unions and the employers actually sit down and agree something, over a nice cup of tea (or more likely a bottle or two of Tuborg)? Awesome!

In case you find that just too far-fetched, here’s the official low-down: “In Denmark the minimum wage, including wage increases, is not subject to regulation by law, but by collective agreements between the social partners only. In the recent years there has been a trend towards collective agreed wage increases that do not correspond to the evolution of consumer prices or inflation rates. This means that in real terms a wage reduction has been agreed within several sectors. In local agreements at company level, wage freeze is also common for a limited period of time in order to obtain job security. Examples of wage reduction in nominal terms exist but this trade-off is not widespread.”

OK, so those Scandis are a peculiarly huggy bunch of eccentrics. What’s the Minimum Wage picture in the rest of Europe? “Minimum wage is the lowest amount a worker can be legally paid for his or her work. Twenty-one European countries have – in varying shapes and forms – a statutory national minimum wage (comparable to non-European countries, such as Canada, Japan and the USA). This group is made up of most of the EU-15 member states (Luxembourg and Portugal also have statutory national minimum wages) and all ten new member states. Whereas France, Greece, Portugal, Spain and the Benelux countries have a long tradition of protecting pay at the bottom of the labour market, Ireland and the UK did not introduce national minimum wage systems until the late 1990s. In Austria, Denmark, Finland, Germany, Italy and Sweden – the remaining ‘old’ EU member states – as well as in Norway and Cyprus, collective wage agreements are the main mechanism used for regulating the lowest salaries.”

So most of Europe seems to have cottoned on to the value of doing the decent thing some considerable time ago. It’s only the UK and Ireland who finally got dragged – kicking and screaming, no doubt – into the minimum wage net as late as the end of the last century.  At the time, the Conservatives and business chiefs issued dire warnings that it would lead to job losses. Which, of course, it didn’t. In fact, these days some Tories even argue cogently for the Minimum Wage to be raised.

Unfortunately Call-me-Dave and Boy George are arguing the opposite: The minimum wage should be cut…I know, it beggars belief and is very sad, really.

But credit where credit’s due – Boris Johnson has expressed his support for the Living Wage campaign. Boris never fails to spot a vote winner. In fact, with social media and the general rise of people power on the march, politicians across the political spectrum seem to be realising that bringing greedy vampire squids to book could actually improve their political popularity at the polls. No sh*t Sherlock!

Who knows, one day Bob Crow may even manage to conduct a civilised conversation with Vince Cable, and reach an amicable agreement over a Tuborg or two.



2 thoughts on “Borgen solves the Minimum Wage issue: Don’t have one

  1. Plan C from the Social liberal Forum is certainly the closest we currently have to a plan for proper constructive reform.

    Direct workplace democracy is, without a doubt, the way forward, just as inclusivity and self-determination is the first commandment in every aspect of a progressive society.

    In the UK, however, generations of adversarial, pugilistic relations between every strata of society, starting with Westminster politics and seeping through labour relations, education, health, benefits, has left a society devoid of even the tiniest smidgeon of mutual trust.

    “If you do X, we’ll punish you with Y” … The Fear Factor … The Shock Doctrine … all sit at the top table of UK decision-making tactics.

    Until that changes to “If you do this for me, I’ll do this for you and we’ll both win”, in other words turning the economists favourite Prisoners Dilemma game on its head, the Danish model of trade union reps sitting on company boards is a mere pipe dream.

    In this country, such talk is dismissed as naive. Go figure.

    Undoubtedly some companies would respond to higher wages by hiring robots or shipping jobs abroad, but they’re most likely the same firms that have a penchant for tax dodging and low wages that end up costing us all dearly – in every respect.

  2. Pingback: On wages, income and employment – would stronger unions solve our economic crisis? | Plan C from the Social Liberal Forum

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