Investments  

Waging war on low pay

Lucy O’Carroll, economist at Aberdeen Asset Management, says Mr Miliband’s proposed changes to the minimum wage are not a top-level political risk at present.

Other issues – such as the wider economy, the housing market and immigration – have more traction among the electorate, she argues.

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“The fundamental issue with the minimum wage is setting it at a level that provides an appropriate compromise between providing protection for the low-paid [and] stifling jobs and growth,” she says.

“The LPC appears to have done a decent, independent job of steering this course for the government during the past 15 years or so.

“[Regarding] whether implementation of Labour’s proposal is technically possible and would provide a similar track record to that of the LPC at present, we would really need to see more detail on the proposal.”

However, others see Labour’s proposal as a positive move that could have beneficial consequences for both employers and employees.

Marianne Fallon, partner and UK head of corporate affairs at KPMG, says the proportion of people on low pay has climbed in recent years while the cost of living has risen, resulting in people struggling to afford the basics.

“This is a scenario that should be consigned to the history books,” she says. “Fair pay is, after all, fair play. Organisations that can afford to do so should offer staff and suppliers a wage that is enough to live on. Doing so affords people the opportunity to improve their work-life balance, as they are not forced to work longer hours or hold down more than one job.

“We are pleased to see an increasing number and range of businesses and politicians across all UK parties supporting a living wage. A sensible review of the national minimum wage would be welcome, especially as it has fallen behind in real terms since the current level was set.”

She adds that KPMG’s experience of offering a living wage has seen a rise in service standards and a fall in sickness, which is good not only for individual morale but also for business.

“The cost of improving take-home pay for the lowest earners will be outweighed by the benefits of improved engagement and enhanced productivity,” she says.