Would a local minimum wage work for everyone?

17 April 2008 by
Would a local minimum wage work for everyone?

London mayoral candidates have pledged to bring in higher wages for the capital's lowest-paid hospitality workers. Christopher Walton reports

Low-paid workers in London's hospitality businesses took one step closer to a living wage last week. Four of the candidates to be elected Mayor of London on 1 May pledged to work with campaign group London Citizens to introduce a London-wide living wage for all hotel and hospitality workers in the capital by 2012.

Labour candidate and incumbent Ken Livingstone, Conservative contender Boris Johnson, Liberal Democrat candidate Brian Paddick and Sian Berry from the Green Party told an audience of 2,500 faith group representatives, students and union members that they would all work to introduce such wage structures in time for the London Olympics.

They also agreed to proposals that only establishments in the hotel and hospitality sector that paid a living wage would be endorsed by Visit London and other tourist guides.

Ardent supporter

Livingstone is one of the more ardent supporters of proposals to pay London hospitality employees more than the national minimum wage rate of £5.52 per hour. The mayor said that his own experience of implementing the same policy at the former Greater London Council in March 2005 had meant that employees there "do not have high sickness rates, are working better and are happier at home".

Johnson, who was roundly booed when he took the stage, won the audience round when he said he would adopt the proposals because "the gap between rich and poor has widened in the past 10 years".

Paddick asked: "What chance do people have to succeed if they are living in poverty? And how can Londoners be proud of hosting the Olympics if people do not earn a living wage?"

The argument for a living wage for employees in cities with high costs of living, such as London, is that they need to earn more than the minimum wage just to stay above the poverty line. A figure of £7.20 was put forward by the Greater London Authority (GLA) in March 2007, and its living wage unit established that, at the time, any worker in London paid less than £6.25 an hour was in poverty, primarily because of the high cost of housing.

The GLA's March 2007 report stated that about one in seven full-time workers in London and almost half of its part-time workers were earning less than a living wage.

The figure of £7.20 does not include any means-tested benefits such as tax credits or housing benefits, but it takes into account holiday and sick pay.

The campaign is spreading nationally, too, outside the bubble of London's mayoral election. In Oxford, the city council is evaluating proposals to ensure that its employees are paid £7 per hour, while the Welsh Assembly in Cardiff has agreed to a living wage of £6.70 for its employees.

But employer groups have urged caution. Bob Cotton, chief executive of the British Hospitality Association, noted that the Government had always vetoed proposals for regional differentiations in the minimum wage, and questioned the legality of a separate rate in the capital.

He asked: "Would it be based on where people work, or where people live? What about workers who are commuting from outside London?"

He added: "What they should be focusing on is how you can create more jobs in London and encourage an economy that continues to grow."

Cotton said that London businesses were not finding it difficult to recruit staff, and repeated the oft-heard claim from employer groups that a rise in the minimum wage would lead to job cuts. He asked: "If the group behind these proposals are looking for a 20% wage hike in London, are they prepared for 20% job losses?"

Phil McCabe, spokesman for the Federation of Private Business, which represents 25,000 small businesses, agreed that a rise would lead to job cuts and warned that it would lead to higher prices for the consumer.

He said: "A lot of these kinds of issues - national minimum wage changes, maternity and paternity rights, and extended holiday leave - are all beneficial to employees, but we cannot ignore the costs that businesses face."

However, Stephen O'Brien, vice-chairman of Business in the Community, which represents 800 employers focused on improving corporate social responsibility, welcomed the politicians' pledges.


"We want to express solidarity with this campaign," he said. "Our members believe in delivering quality of service as businesses, and we want to employ the very best people possible."

There is clearly the will to improve the life of employees, but whoever wins the mayoral election will have to work closely with the hospitality industry to ensure that the policies around pay are workable.

Read more on minumum wage at www.caterersearch.com/minimumwage

Read more on hospitality skills on www.caterersearch.com/skills

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