Living Wage

Jack Dromey Excerpts

Wednesday 9th January 2013 Westminster Hall

[Jack Dromey (Birmingham, Erdington) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Main. I congratulate my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) on initiating this very welcome debate.

I have always believed in the dignity of labour and of work, but for millions in work and living on low pay, life can be a precarious existence that involves counting every penny. Under Labour, great progress was made. The national minimum wage transformed the lives of millions. In my former being as deputy general secretary of the Transport and General Workers Union and then of Unite, I heard heartbreaking examples of people who, having gone to work for 40, 50 or 60 hours a week, were given their wages slip and saw that they had been paid £1.50 or £2 an hour.

If it is true that the national minimum wage transformed the lives of millions, it is also true that life on the national minimum wage could be very tough, which is why the notion of the living wage was born. It was born in the east end of London, initially by TELCO—the East London Communities Organisation—which was formed by faiths and community groups, as well as by a parents’ movement, about which I shall say more later.

When I was elected deputy general secretary in 2003, one of the first things that I did was to sit down with those excellent people, and together we mounted a highly effective campaign to end poverty pay, initially in Canary Wharf and the City of London. It was nothing short of obscene that good men and women from all over the world cleaned boardrooms and toilets in those giant tower blocks—in which average wages were frequently £150,000, £200,000, £500,000 or £1 million a year—on the national minimum wage, with statutory sick pay, no pension and the basic minimum entitlement to holidays. That powerful movement changed the lives of 4,000 cleaners in Canary Wharf and the City of London.

Interestingly, an alliance of organised labour and faiths initially drove the process, but as we broke through, first one and then the other, we had more and more employers coming out and saying, “This is right, and we should have done it earlier.”

[Gloria De Piero (Ashfield) (Lab)]

I just want to put it on the record that it is right to praise people and organisations such as Barclays, KPMG and the many Labour councils across the country, including my own Ashfield district council, for introducing a living wage.

[Jack Dromey]

More and more employers are embracing the living wage. The next landmark in our campaign was the organisation of the first strike in the history of the House of Commons—it was of the cleaners. I have the manifesto that was produced by those cleaners. Let me remind Members of where we were just four years ago. We were talking about wages of £4.85 to £5 an hour, 12 days holidays plus statutory days, statutory sick pay only and no pension. I am pleased to say that, with the support of MPs from all parties, we broke through and now those cleaners earn the living wage.

More than 130 employers in London have embraced the living wage, and that is increasingly happening elsewhere in the country—in areas such as Ashfield. In London, all three parties in the Greater London assembly have supported the living wage, and as a result, tens of millions of pounds have gone to the low-paid.

Let me put the case for the living wage. First, it is good for business. There is no question but that it has a substantial impact on productivity. Indeed, in surveys of employers that have introduced the living wage, some 80% have said that there was a discernible improvement in the quality of work and that absenteeism fell by 25%. Two thirds of the employers said that they had seen dramatic improvements in recruitment and retention, with far less churn in their work force than previously, and 70% said that it had been good for the standing and the reputation of their company. Frequently, employers seek to sell themselves as being reputable and ethical, and the fact that they are living wage employers contributes to that. As for the business case, job quality, productivity, service delivery and reputation have all been improved, with a relatively minor increase in costs on the part of those companies.

A living wage is good for the individual, because dignity in work is enhanced by a living wage. Interestingly, in the surveys that have been done of employees in living wage companies, 50% have said that they have been much more willing to embrace change within their companies as a consequence of the fact that, at last, their labour is being recognised by way of the living wage.

The living wage is good for society. Returning to the origins of the living wage campaign in east London in 2001, 2002 and 2003, the parents’ groups were a powerful driver. They argued that having to take on two or three jobs to be able to pay their bills was an enemy of family life. The evidence is that, in London alone, 15,000 families have been lifted out of poverty by the introduction of a living wage. If we look at the principal beneficiaries, we see that 88% are women. A living wage is also good for the taxpayer. By definition, if people are getting a living wage, they are less likely to need to depend on benefits and tax credits.

I am proud to say that Birmingham, like Ashfield and many other local authorities, is now driving forward with the living wage. It was the first pledge to be honoured by the incoming Labour administration last May. There were three stages. The first stage took in the 3,000 directly employed employees in Birmingham, such as the wonderful Elaine Hook. They were previously paid just a penny above the national minimum wage of £6.19. They then received a £1 an hour increase, putting up the wage to £7.45 an hour. Time and again, Elaine Hook has said that she cannot describe the difference it has made to the quality of her life.

The second stage, which is under way right now, relates to the council’s procurement power. I have a strong view that taxpayers and council tax payers are entitled to feel confident that contracts are let to decent and reputable employers—employers who pay the living wage. Such a policy is now being rolled out in Birmingham, but not just by way of insisting that any contract let includes the living wage for goods or services. The council is also building Birmingham’s business base by maximising the letting of contracts in the area and following other noble objectives, such as more employment opportunities for disabled workers.

The third stage is the leadership that we give in the city as a whole and the power of advocacy, working with a wide coalition of interests. Put simply, the argument is that Brummies are worth more than the minimum wage; every one of them is entitled to the living wage.

We are also talking about the sort of society that we are. It is wrong simply to see this as a moral issue. From my own experience in the world of work, I know that there is a powerful business case for the living wage. There is also a powerful economic case, because low-paid workers who move on to a living wage do not salt away their money in tax havens; they spend it in local shops and local businesses.

None the less, there is, unashamedly, a moral case. As part of the great drive for the living wage in Canary Wharf and the City of London, we had, for four consecutive years, multi-denominational faith events in Westminster cathedral. Hosted by the Catholic Church, the events had all the churches, mosques and synagogues coming together. Some 4,000 people would turn up on the feast of St Joseph the Worker, or May day. On one occasion, Cardinal Cormac Murphy-O’Connor and Canon John Armitage, the chair of London Citizens, gave two magnificent sermons. They summed up the history of the drive of the faiths and organised labour for the dignity of labour, going back to the 1889 dock strike for the dockers’ tanner. They said that there is a powerful moral case for the living wage. As John Armitage said, markets without morality contain the seeds of their own destruction. The time for the living wage has come.

[Mrs Anne Main (in the Chair)]

There is just over 30 minutes before the start of wind-ups, and six Members wish to catch my eye.