Statutory Minimum Wage (Hansard, 16 October 1990)

I beg to move,

That leave be given to bring in a Bill to make provision for the introduction of a statutory minimum wage; to make provision in respect of related duties and responsibilities of employers and wages councils; and for connected purposes. Members of Parliament enjoy a statutory minimum wage, and it seems wholly wrong that one should be denied to the most poorly paid members of our society. The Government's so-called economic miracle has proved a mirage, especially for the low-paid in our society.

In Hansard on 17 May 1988, the Prime Minister argued that proof of the success of her economic policies was that Everyone in the nation has benefited from the increased prosperity".—[Official Report. 17 May 1988; Vol. 133, c. 801.] I emphasise her word "everyone". That is the so-called trickle-down theory, but the hallmark of that theory under the Government has been the growth of inequality. The gap between the rich and the poor has increased due to the Government's economic and social policies.

The trickle-down theory originated in America, as so many of the Government's ideas do. John Kenneth Galbraith, an American economist, likened the trickle-down theory to the idea that if one feeds sufficient oats to a horse there will eventually be something for the sparrows. He noted that this theory was more popular with the horse than with the sparrow, which is no surprise. We note that directors awarded themselves pay increases in excess of 33 per cent. last year at the same time that the Government told the low-paid to cut their requests for decent wages.

To give an idea of the scope of low pay, I shall quote from evidence from the south-west region, where my constituency is situated, using Government statistics from the new earnings survey, which shows that the region is riddled with dramatic inequalities between men and women, part-time and full-time workers, non-manual and manual workers. The picture highlights, almost to the point of caricature, the fact that the Government's free market policies bring a divided society where economic affluence for some is paid for by poverty pay for many. It is appalling that people who work long, hard hours, sometimes six or seven days a week, should have to claim benefit to attempt to make ends meet.

Pay inequality has reached record levels. The 1990 new earnings survey shows that, in 1979, the lowest paid 10 per cent. of manual workers earned 68.3 per cent. of average pay. In 1990, the figure has dropped to 63 per cent., and it is lower than at any time since records began in 1886. The gap between the best paid and the lowest paid—pay inequality—is worse in 1990 than it was in 1886.

During the past 10 years, the best paid workers have received real pay increases 16 times greater than those for workers on low pay. The causes of low pay are manifold, but it is clear that, without intervention from Westminster, the south-west, like all other regions, will continue to have widening pay inequality and entrenched low pay.

The single market may well make matters worse by enabling more social dumping, whereby European companies can join relocating United Kingdoms firms to exploit the region's low pay.

A major cause of the poverty experienced by hundreds of thousands of workers and their families, in the south-west and elsewhere in the United Kingdom, are the 1058 Government's policies, which encourage the spread of low pay and inequality. The Government's lone opposition to the social charter, the proposed abolition of the wages councils, the threat of benefit suspension for unemployed people who refuse to take low-paid jobs, and encouragement for employers to pay benefit level wages in temporary wage top-up schemes all bear witness to that.

In the south-west, three quarters of a million workers—half those in employment—earn wages below the poverty line of £4.16 per hour; 400,000 workers, of whom eight out of 10 are women, would benefit immediately from the introduction of Labour's plans for a statutory minimum wage of £3.10 per hour.

The majority of workers in the south-west earn less than the Council of Europe's decency threshold of £4.32 an hour. Women are twice as likely to be lower paid than men and part-time workers are two and a half times more likely to earn less than £3 an hour. More and more firms are illegally underpaying their workers, but few are prosecuted, since the wages councils have been marginalised and isolated by the Government. We need to introduce a statutory minumum wage and to strengthen the statutory duties of the wages councils to enforce wages and to protect workers who go to them with complaints of low pay.

These rights must be extended to part-time and home workers, thus following the example of the European Community, which is developing the idea of atypical worker—those who do not work a normal working day. Our equality laws need to be strengthened, and social security benefits must be improved in order to reinforce the work of the wages councils. These proposals are a vital tool in the attack on poverty and inequality. Those who own companies have proved that their strategy is to keep as much as possible for themselves and to pay as little as possible to those they employ, thus hitting women workers the hardest.

A statutory minimum wage should be an essential part of our economic strategy. It would help to counter the trend of short-termism in the United Kingdom, whereby low pay and low productivity are chosen as low-cost alternatives to investment in training and equipment. A statutory minimum wage would lessen the danger of the United Kingdom becoming a low-wage region in Europe, by acting as an incentive to United Kingdom employers to pursue high-wage, high-investment and high-productivity business strategies.

Finally, a statutory minimum wage would alleviate the poverty and misery of hundreds of thousands of families whose labour is exploited by unscrupulous, unreasonable and unfair employers. I commend the Bill to the House.