First published in Progress magazine
The power of moral and social pressure can be brought to bear to bring about better wages for the low paid. Companies can aim for an accredited ‘gold standard’ by narrowing the chasm between their highest and lowest paid employees.
During the Labour leadership campaign the candidates fell over themselves to support the idea of a living wage. Ed Miliband had his own website campaigning for it; David Miliband employed the team behind the living wage campaign to run his Movement for Change; and Ed Balls, to his immense credit, had uniquely implemented it in his department as schools secretary. Labour’s new leader was right to put the issue – along with the wage differentials between those at top and bottom of the society – front and centre of his leadership speech at conference.
We should, however, be cautious about the politics of a high pay commission. The idea is convenient, allowing Ed Miliband to kick into the long grass exactly what might be done to clip the wings of top-flight earners. It may also provide our critics with untold scaremongering opportunities. We could probably identify them now: unemployment, brain drain – you’ve heard it all before.
The critics might have one point: much of what is needed to achieve change will not be achieved by old-fashioned statism or legislative sledgehammer. This is illustrated nicely by the social, moral and consumer pressure that the campaign group London Citizens has brought to bear on banks, companies, and government departments. Through trade unions, local groups and consumer advocates they have convinced, cajoled and shamed companies into paying their poorest better.
To back this work up, Citizens UK have accredited 100 companies, won £40 million in additional income for working people, and lifted 6,500 people out of poverty.
Meanwhile, respected kitemarks, most notably that of the Fairtrade Foundation, are run by civil society, not government. The same could apply to the living wage: companies who pay it would find displaying a kitemark a boon to their reputation.
Labour should look to this approach – not wait until we are in government – and apply a ‘big society’ approach to the issue of low pay. The labour and trade union movement could and should build on this work, form the backbone to the community and student groups around the country promoting the scheme and applying pressure to more employers. This could happen in much the same way Fairtrade town and campus committees are a feature the length and breadth of Britain.
But this could be taken a step further. On the left we are angered by massive pay differentials within companies. David Miliband suggested putting cleaners on company remuneration committees, so those awarding themselves casino bonuses have to look someone earning poverty pay in the eye while they do it. This could form another part of the kitemark programme. For example, paying both the living wage and having low-paid workers on remuneration boards could promote you from bronze to a silver – much like the Duke of Edinburgh award.
Further still, the Olympic gold of this system could by applying the ‘John Lewis standard’: ensuring that those at the top of the company are not paid more than 75 times its average shopfloor worker. It was a radical ideal in 1929 when John Spedan Lewis enshrined the principle in the deeds of the company. It remains radical today: 81 years later, the differential stands at 128 times the average salary among Britain’s top companies.
Labour cannot wait to be in government to act. Through the ‘big society’, it can create much of the good society we all desire.
Richard Angell is deputy director of Progress