Is it a step forward or a stumble into the unknown? Britain has a new National Living Wage, courtesy of embattled Tory Chancellor, George Osborne. The only problem is, how does a company pay its employees the new legal minimum without either increasing its profits substantially or else cutting back on its workforce?
No one should begrudge giving low-end workers struggling to pay their bills a decent pay rise spread over four years. It is not as if, in the aggregate, they are less essential to the nation’s well-being than, say, hedge fund managers or commodities traders. The problem comes when increases in their wages have to be funded out of earnings that over the same period go up by just three or four per cent.
The low-paid are not, of course, alone in this. Austerity, combined with the never-ending drive for cost-savings, throws up issues that extend far beyond the restrictions of a minimum wage. What if market forces dictate that a company’s earnings barely rise from one year to the next, or even from one decade to the next? What if the nature of work carried out presents few challenges or never varies, making it difficult for individuals – even diligent, hard-working men and women – to stand out from the crowd? What, more generally, if the management of decline is the best that a sector, no matter how central to industry’s needs, can reasonably expect? There are many examples of this – steel, retail, agriculture – but let me quote the one I know best.
Big newspapers used to be big employers. News International once retained 5,000 printers, 2,000 journalists and an army of advertising and circulation staff. Its rivals were similarly bloated. Then along came Eddie Shah and Rupert Murdoch, and everything changed. The printers were sacked, computers were introduced and jobs for life on the editorial floor became contracts that could be ended any time the proprietor needed to make further savings – which is to say every year, without fail, since 1986.
What began as an entirely justifiable industry response to gross overmanning and under-performance has become a reflex. Instead of redressing newly emerged imbalances, owners have elected to reward those at the top (on whose loyalty they think they can depend) with high salaries, bonuses and share options while cutting back savagely on the number of jobs lower down and paying those at the bottom just enough to dissuade them from quitting. This is the new norm, in London as much as Kolkata.
The result? The Guardian, long a bastion of sanctimony, is a basket-case, the Great Gatsby of King’s Cross. The Independent has faded into a media version of the Cheshire Cat (“You may have noticed that I’m not all there myself”). The Telegraph, the Dowager Duchess of Fleet Street, is struggling in old age to appear relevant to anyone under 50. The Mirror group, governed by a slash and burn mentality, barely bothers any longer to lie about the Old Labour values out of which it sprang. Just one notch up from a supermarket tabloid, the once-mighty Express is reduced to being a cash-cow for owner Richard Desmond (net worth £1.3bn) and a workhouse for its journalists. Of the rest, the Mail, still owned on a hereditary basis, has survived, even thrived, on a diet of sensation, scandal, soft-porn and cellulite, while The Times and Sunday Times, still in there fighting, are like the British Army in 1918 – victorious but exhausted, desperate for an armistice.
The fear was, and continues to be, that if you give the lowest-paid a significant increase, the effect at the upper end will be … unfortunate. Editors, top-execs and star columnists (for which read bankers, senior managers and company directors), could find themselves denied the handsome increases they are used to just so that snots at the bottom are able to pay their mortgages. That was never going to happen. Pull on that thread, they reckon, and the entire capitalist system would start to unravel.
As it happens, very few journalists, at least on national titles, earn just £288 a week. It is interns, desperate to find employment, who earn little or nothing. But the approach is the same wherever margins are tight and hard decisions have to be made about how to slice the cake. Britain may have grown richer in the Thatcher/Blair era, with more multi-millionaires than you could shake a stick at. But it has simultaneously lost the will to create more than the illusion of a fair society.
If the UK truly is the world’s fifth-largest economy – a claim regularly cited by both sides in the Brexit debate – why, in the 35 years that have elapsed between the election of Margaret Thatcher and the claim that David Cameron’s dad salted millions away in the Caribbean, have we had to keep slashing away at public spending? Surely if we’re getting richer, there must be more money to spend, not less. Why is there not enough cash available to fund the NHS? Who is benefiting from the trillions of pounds generated annually by the City of London? Why do we all discount as an obvious waste of breath the possibility that there might be a British buyer for the Port Talbot steelworks? Whatever the explanation, the fact is that in an age of conspicuous wealth, millions of ordinary Britons have ended up less well off than their parents. Worse still, the rug of dignified employment is being ripped from under them.
If we are not as a society to drift back towards the Victorian model of capitalism, some balance has to be restored to the system. Those at the top today, far more than in past decades, clearly believe they have a moral right to be wealthy while dismissing – often quite literally – those who work for them as no more than a necessary evil, the cost of which must be kept to an absolute minimum. They forget that an impoverished majority is a threat to economic stability and, ultimately, to their own privilege.
The new National Living Wage of £7.20 an hour, rising to £9 by 2020, should mean that the lowest-paid in Britain can expect to at least keep pace with inflation in the years immediately ahead. But, crucially, its beneficiaries have absolutely no guarantee that their jobs are safe. What they have instead is Hobson’s Choice. Would they rather earn less for longer or would they prefer to get an increase that turns out to be more than their job is worth? Steelworkers in South Wales, hoping desparately that someone will step into Tata’s worn shoes, will not be looking for pay rises; rather, they will be getting ready to tighten their belts another notch so that they don’t end up on the dole or sweeping the streets. Shelf-stackers at Tesco and Waitrose, under threat from Aldi and Lidl, are expected to be grateful that they have a job at all. And what about Eastern European immigrants newly drawn to the UK by the prospect of a further low-wage windfall? Who can stop them? Brexit or no Brexit, these are the types of question on which much of the British economy will turn in the coming years.
