Ghosts of Labour Past: ‘The minimum wage will benefit no one’

In 1999, Labour won the battle to introduce the minimum wage.

The change gives a pay rise to over two million people – more than half of them in the service sector

The Conservatives maintain it will add to business costs and lead to job losses. Labour claim it is a key step in combatting poverty

The story of the battle to introduce it

By the early 1990s over a million people earned less than £2.50 an hour and 300,000 earned less than £1.50 an hour. This was in spite of the TUC calculating that a level of £3.50 was needed to meet the cost of living.

Many of the underpaid workers were women who worked as cleaners, dinnerladies and shop assistants. It ensured that in 1993 the gender pay gap stood at 29%.

Labour adopted a NMW policy for the 1992 general election. However, announcing that the rate would be set at £3.70 per hour (half the male median earning)

The Tories calculated that a NMW would lead to two million job losses. A press release from April 1991 read: ‘Michael Howard warns Labour Minimum Wage Fiasco ‘could double unemployment’.

Tony Blair committed to a minimum wage when he became leader in 1994:

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‘Keir Hardie did not manage to achieve a minimum wage and nor did Attlee, Wilson, Callaghan or anyone else, but this next Labour government will introduce a statutory minimum wage for Britain. That is our pledge, and it will be done’

Once in government, Labour set about their task and a minimum wage was pledged in the first Queen’s Speech

‘My government is committed to fairness at work and will introduce a national minimum wage’

Gordon Brown claimed in his first spending review that

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‘the minimum wage will not only establish a floor under wages but ensure in work benefits act as a genuine top up for low paid work rather than a subsidy for low-paying employees’

Margaret Beckett introduced the bill to the House in December 1997:

‘We all know the examples: a homeworker paid as little as 35p an hour, a cleaner paid £1.30 an hour or a security guard paid £2.35 an hour—and bring your own dog!’

‘The Low Pay Commission found other examples; of people working for 80p an hour in a chip shop, £1.22 as care workers and as clerks for just £1.66’

One of the biggest opponents of the national miniumum wage was The Times newspaper.

In an editorial it argued and that it was ‘an act of ancestor-worship by the Government, a homage to the ghosts of old labour past’

The paper claimed it was an ‘irrelevant, economically illiterate and potentially harmful decision’.

The Tories fought against its introduction. John Redwood:

‘We have warned the government throughout, that a minimum wage policy will not work.’

Redwood cited a report that one million jobs could be lost ‘if we had a national minimum wage at half average earnings’.

Damian Green claimed a minimum wage was ‘immoral’ arguing that it would ‘discourage workers from taking low-paid, socially useful work…it deludes people into thinking that it is an attack on poverty. It will not reduce poverty’

Michael Portillo claimed it was

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‘a truly immoral policy. It masquerades as something caring but will actually damage people. Its main benefit will be to the better off. The worse off will lose their jobs.’

Tony Blair was unrepentant:

‘These are the people who opposed a national minimum wage at any level. These are the people who are happy that hundreds of thousands of people are paid below £3 an hour, £2.50 an hour’

He claimed the Tories:

‘are the people who believe you can build an economy on sweatshop wages. This side does not’.

Trade Unions were opposed to aspects of the minimum wage which created a lower threshold for people under the age of 21.

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The GMB recruited EastEnders Ross Kemp to argue:

‘Everyone from school leavers to sixty-something workers should be entitled to the minimum wage for doing the same job’

John Edmonds – of the GMB – claimed

‘the government will be making a large political mistake’ if it created a lower rate form under 21s.

Despite the Tory opposition, the National Minimum Wage Act was enacted on July 30th 1998. The legislation would apply to all employees regardless of their sector.

Set at a modest level of £3.60 per hour, the government aimed to start low and evaluate its effect over time.

Jack Dromey of the TGWU argued it was

‘a marvellous step in the right direction. It will establish for the first time a low point’

While Tory MP Tim Boswell lamented it

‘this means an increase in costs for business, with people’s job prospects the likely long-term losers’

When the law came into force in April 1999, two million people received a pay rise overnight. It was estimated that 10% of all women workers benefited from the rise.

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