Destitution: Low Median Wage

Lord Hendy Excerpts

Thursday 23rd November 2023 Lords Chamber

Asked by

[Lord Hendy]

To ask His Majesty’s Government what steps they intend to take to address the UK’s low median wage and its contribution to the level of destitution presently under consideration by the UN Special Rapporteur on Extreme Poverty and Human Rights.

[The Parliamentary Secretary, HM Treasury (Baroness Vere of Norbiton) (Con)]

My Lords, boosting economic growth is the only sustainable way to increase wages. This Government have overseen significant falls in poverty since 2009-10, with 1.7 million fewer people in absolute poverty after housing costs. Supported by the national living wage, the proportion of low-paid jobs fell to 8.9% in 2023, from 21.3% in 2010.

[Lord Hendy (Lab)]

I thank the Minister for her Answer. While extortionate price increases have recently moderated, the real value of wages has been static since 2007—a nominal 6.2% increase in median wages last year translated into a 1.2% drop in their real value, according to the ONS. Half the working population earns less than £29,600. The Joseph Rowntree Foundation reports that 19.2 million people live below the minimum required to be warm, dry, clean and fed, with 3.8 million in destitution. The increase in the national minimum wage still leaves it, in real terms, no higher than it was 20 years ago. Wages need to rise. Only extensive collective bargaining can achieve that. Will the Minister make that happen?

[Baroness Vere of Norbiton (Con)]

I fundamentally disagree that collective bargaining will be the way to lift wages; I believe that economic growth will be the way to lift wages. What I would like to say—and I would criticise this Government and previous Governments for not making the most of this—is that, when we look at the national living wage, the increases we made yesterday mean that, next year, someone working full time on the national living wage will see their real after-tax take-home pay go up by 30% since 2010. I think that is a very significant achievement.

King’s Speech

Lord Hendy Excerpts

Monday 13th November 2023 Lords Chamber

[Lord Hendy (Lab)]

My Lords, 67 million people live in the United Kingdom. Of them, 35 million, just over half, are workers—30 million employees and 5 million self-employed. In the King’s Speech, the Government offer them nothing, except the prospect of agency strike-breakers and regulations requiring workers to break their own strikes.

On 9 November, the International Labour Organization governing body considered the mass sackings at P&O Ferries last year. It called on the Government to engage with unions and employers to review the legislative prohibition on sympathy strikes, and to ensure an adequate and efficient system of protection against acts of anti-union discrimination. Will the Government comply?

Noble friends have mentioned that in 2019 we were promised an employment Bill. The noble Lord, Lord Callanan, has told us many times since that the Bill would be introduced “when parliamentary time allows”. We now know that there never will be parliamentary time before the next election.

The real issue facing working people, and the overwhelming majority of the rest of the population who depend on them, is rising prices and falling wages. The real value of wages has not risen since 2007. The nominal median earnings for full-time employees were £682 a week in April this year: £34,963 gross—an increase of 6.2% compared with April the previous year. However, the ONS tells us that that nominal increase actually represents a fall in the real value of earnings of 1.5%. Self-employed median earnings are significantly less than for employees. Today’s report from the Resolution Foundation, An Intergenerational Audit for the UK, shows that those born in the late 1980s earned on average 8% less at age 30 than their counterparts born 10 years earlier.

The ONS’s use of the term “median” means that half our full-time employees earn less than £35,000 a year. Few in this Chamber, including me, could live on that figure, let alone less. A report published on 8 September by Professor Padley and Dr Stone of the Centre for Research in Social Policy at Loughborough University calculates that in 2023 a single person needs to earn £29,500 a year to have an acceptable standard of living and a couple with two children need to earn £50,000 a year. They estimate that no fewer than 19.2 million people, 29% of the UK population, are living in households with an income below those minimum standards. Among these 19.2 million are those on the so-called national living wage. The total annual salary for such a person working 37.5 hours a week is £20,375 a year, which is 70% of the Padley/Stone minimum standard for a single person and 41% of the minimum for a family.

It is not surprising that the Joseph Rowntree Foundation’s latest report Destitution in the UK 2023 shows that around 3.8 million people, 1 million of them children, are not able to meet their basic physical needs of staying warm, dry, clean and fed. The UN special rapporteur on extreme poverty and human rights pointed out last week that the UK is accordingly in breach of its international legal obligations.

I do not diminish the significance of raising the national minimum wage or enhancing pensions and social security, but there is only one way to raise wages significantly and that is by extending collective bargaining, as a recent directive in the EU and legislation in Australia and New Zealand propose. This is the solution that the OECD has been advocating in its annual employment outlook since 2017. I ask finally, without a glimmer of hope, that the Minister will consider with social partners not just the conclusions of the ILO, to which I referred, but the means by which collective bargaining coverage can be extended by law, as the Labour Party has undertaken to do.