National Minimum Wage (Amendment) Regulations 2021

Lord Hendy Excerpts

Monday 1st March 2021 Lords Chamber

[Lord Hendy (Lab) [V]]

My Lords, an increase in the national minimum wage must be supported. But for the reasons given by my noble friends Lady Chakrabarti, Lady Clark of Kilwinning, and Lady Blower, there is nothing to celebrate in an increase of a meagre 19p per hour.

The thesis that the national minimum wage should be as low as possible, otherwise it will be too expensive and employers will cease to hire, has been wholly debunked by experience and economists both here and in Europe. In fact, as the noble Baroness, Lady Jones, explained a moment ago, higher wages create more demand in the economy which leads to more goods and services and more jobs. It increases the tax take and diminishes the need for benefits to subsidise low pay. That is why the European Commission is proposing a minimum wage directive across the EU, one provision of which is to require the promotion of collective bargaining. Collective bargaining, particularly at sectoral level, is the most effective way of increasing wages. As my noble friend Lady Blower pointed out, the OECD and the ILO have strongly commended it to Governments in recent years.

In contrast, Government policy in this country has been to diminish the extent of collective bargaining year after year; 82% coverage of British workers in 1979 has sunk to less than 25% today. That is one reason why 9 million people living in poverty are in working families, with the consequences that Sir Michael Marmot has noted.

Yet in the EU-UK Trade and Cooperation Agreement, Article 8.3(7), the Government undertook to

“promote social dialogue on labour matters among workers and employers, and their respective organisations, and with relevant government authorities.”

The Low Pay Commission, although it contains nominees from various bodies, is not a negotiating body and does not fulfil the need for social dialogue; and miserable as the minimum wage rate is, some employers still strive to get away with paying less, as the noble and right Reverend Lord Harries of Pentregarth pointed out. In December 2020, HMRC named 139 companies which had failed to pay £6.7 million to more than 95,000 workers, and we know this is merely the tip of the iceberg. I hope the Minister can agree that the national minimum wage needs to be substantially increased, seriously enforced and subject to collective bargaining.