While the United Kingdom may be leaving the European Union, the UK campaign for a ‘living wage’ has lessons in this regard for the remaining member states—notably in the context of the European Commission’s commitment to introduce an EU-wide legal instrument on minimum wages, in line with the fair-wage provisions of the European Pillar of Social Rights. The campaign brings together employers, unions, researchers and civil-society activists of different stripes to make the case for decent pay for employees at the bottom of the pay ladder. [...]
Statutory minimum wages are not designed to ensure a minimum standard of living. Legal wage floors have multiple objectives, including raising the income of employees on low pay, ensuring a level playing field for all employers and ‘ending exploitative low pay and redressing power imbalances between employers and workers at the lower end of the labour market’. Crucially, these goals need to be achieved with little or no negative employment effects. But the minimum wage is not designed to provide beneficiaries with a minimum acceptable standard of living. The raison d’être of living-wage campaigns is to go this one extra step, based on a detailed costing of what it takes to have a socially acceptable standard of living and to derive a wage from that costing. Campaigns covered in a recent Eurofound review of initiatives worldwide estimated the living wage as anywhere between 13 and 82 per cent higher than the relevant national legal hourly minimum wage. [...]
National minimum wages are blind to growing regional cost-of-living differentials. There is a single statutory minimum wage regime in the UK but there are two distinct living wages based on where one lives. The London living wage is 15 per cent higher than its rest-of-UK equivalent. This underlines the large difference in regional cost of living, notably between larger, more economically dynamic, metropolitan areas and their hinterlands in the same country. The legal minimum wage is likely to be especially inadequate in high-cost cities. This raises sustainability issues for the individual, households and society. The high living costs of cities make it hard for those on low pay to make ends meet. This may also jeopardise labour supply in many services in the public and private sectors, in health and care as well as in retail, hotels and restaurants.
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