How not to keep a promise

At last year's general election, Labour pledged to put an end to poverty pay. Now it proposes to introduce a minimum wage for workers over 21 years of age of £3.60 an hour. By the time it comes on stream next April, it will be worth £3.45 at today's prices. It is likely to be frozen at that level until after the next general election.

As anyone who lives in the real world knows, £7,488 for a 40 hour week, 52 week year is poverty pay. It may, just, be considered compatible with the letter of Labour's manifesto commitment, but it is an outrage on its spirit.

Evidence submitted by Unison to the Low Pay Commission showed that only 6% of all workers would benefit from a minimum wage set at £3.60, while double that number would gain from a £4.00 minimum wage and nearly one in five would be better off earning £4.42 an hour. For women, the impact of setting the minimum at the lower level is even more drastic. Less than 10% of all women will benefit, whereas more than one in four would gain from £4.42. Nearly 17% of all women, compared to only 7.3% of men, are paid on rates between £3.50 and £4.42. The Government's proposed minimum will only entrench this inequality.

We still need -- and should fight for -- a formula which ties the minimum to the general movement of wages. That is the only way to ensure low paid workers get their share of the fruits of economic growth. It ties together our highly segmented labour market, which can only be to the advantage of all workers. It gives the low paid a guarantee that they will not fall further behind, rather than leaving them at the mercy of governmental whim.

We still need -- and should fight for -- a minimum wage that is universal. There is no justification for paying some workers a lower rate for the job merely because of their age. Along with the welfare-to-work schemes, the derisory £3.00 minimum for young people aged 18-21 will promote a two-tier labour force in which young people are viewed as an ever-refilling pool of cheap labour. The Government's approach will institutionalise discrimination and encourage employers to adopt revolving door recruitment policies.

By the next general election, the whole minimum wage exercise may be viewed by millions as New Labour's kiss-off to the working class -- not so much minimum wage as maximum lip-service to minimum effect.

It is instructive to recall the process of dilution here. The commitment to a minimum wage was won by a determined campaign emanating from the grass roots of the labour movement. But under Tony Blair, the idea of fixing the minimum according to a formula was rejected, and it was decided to place the matter in the hands of a Low Pay Commission including employers' representatives. Now, in a further shift away from a comprehensive and effective minimum wage, Blair's Government has rejected key recommendations of its own Commission -- to the detriment of the young and the poor.

At each stage, the trade unions have whinged, but have failed to make their weight felt. The back-peddling has been endless and utterly ineffectual. Yes, we have a minimum wage, at last, and that is a major working class achievement. But the kind of minimum wage that is now on offer fails to grasp the nettle of poverty pay, and locks us into a dangerously stratified and unstable labour market. Under current conditions, so much more could have and should have been wrested from the employers. Labour Party members should flood MPs and ministers with messages of protest. We must mount a concerted drive to force a full discussion of alternatives at this year's annual conference. Labour MPs should put down amendments to the legislation to secure a formula, a higher rate, and a better deal for young workers. Above all, the trade unions must act, through the Labour Party and in the streets.

Adair Turner, Secretary-General of the CBI, said £3.60 was "at the top end of what was acceptable to business". Clearly, the Government's proposals were shaped by that awareness rather than any concern to protect young people's jobs. The trade unions should make clear that £3.60 for adults and £3.00 for youth are well below the bottom end of what is acceptable to workers. If the labour movemnet does not insist on more now it will get nothing later.

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