Living Wage

Debate between Siobhain McDonagh and Tristram Hunt

Thursday 3rd November 2016 Commons Chamber

[Siobhain McDonagh]

There seems to be an issue in retail and I completely understand that, but it appears—contradictorily and counterintuitively—that the living wage has precipitated companies looking at issues other than the hourly rate. The hourly rate has become king and everything else is being cut, but I am absolutely convinced that that was not the Government’s intention.

Not everybody’s pay is being cut or terms and conditions undermined. It is a completely different story for our country’s chief executives. The High Pay Centre has shown that the UK’s top bosses earned an average of £5.5 million each last year. That means that chief executive officers enjoyed a 10% pay rise last year, while wages for low-paid workers rose by just 2%, according to the Office for National Statistics. On average, FTSE 100 CEOs now earn 129 times more than their employees, when we take into account pensions and bonuses. The UK’s top bosses could take a page out of the book of Berkshire-Hathaway’s CEO, Warren Buffett, who paid himself a much more modest salary of $100,000 in 2015.

All of that demonstrates that the link between productivity and remuneration is breaking. It should be common sense that those who make a company’s profits possible should receive a decent day’s pay. They certainly should not be rewarded for their years of loyal service by a receiving a pay cut.

I share the Prime Minister’s sentiments when she said earlier this year that

“there is an irrational, unhealthy and growing gap between what these companies pay their workers and what they pay their bosses.”

I just hope that she will act on those words and encourage companies to think about a whole company pay policy and how much they pay their poorest employees.

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

I, too, pay tribute to the great leadership that my hon. Friend has shown. On the issue of raising wages, the average salary in my constituency is the fifth lowest of anywhere in the west midlands, with a median average salary of £22,000. Having a proper, real and decent living wage will make an extraordinary difference to some of the lowest paid in our communities.

[Siobhain McDonagh]

I completely agree with my hon. Friend. I ask the Government not to renege under any circumstances on their promise to ensure that the national statutory minimum wage will reach £9 by 2020. The British public were promised £9 an hour, so that should be the minimum they receive. The Government must also act to tackle the unscrupulous employment practices of employers who cut staff pay to offset the higher per-hour rate. In the words of the former Chancellor, the right hon. Member for Tatton (Mr Osborne), although such practices may be legal, they are not in the “spirit of the law.” Given the Prime Minister’s vocal desire to champion the situation of the poorest in the UK, I sincerely hope that she will review the ease with which employers can scrap long-standing and historical terms and conditions.

Companies have a responsibility to show a lot more respect to their loyal, long-standing staff. Company boards should count among their members not only lawyers and accountants but ordinary employees. Whether they are HR representatives or shop-floor workers, those who make a company’s profits possible deserve a place at the table.

I welcome the Prime Minister’s forthcoming employment review led by Matthew Taylor, a man who is known to many Labour MPs. I am pleased that the review will consider the issues I have raised over the past year. We need a public discussion that considers more than just pay per hour. We need to consider how the world of retail is changing, leaving many employees behind and offering less and less in the way of career progression. For instance, at B&Q and M&S, new members of staff with little or no professional experience will now receive the same per-hour pay as much more experienced members of staff. Where is the incentive to work hard if someone cannot work their way up? As the fourth industrial revolution beckons, what will happen to communities that have, until now, relied on retail work? What repercussions will that have for the way in which we educate and train citizens and the skills with which we equip them for the world of work?

We also need to consider the repercussions of the new gig economy. Over the last few months, we have seen how employers such as Hermes and Uber mistreat their self-employed workers to keep costs to a minimum. I was extremely pleased that the hard work of the GMB paid off with its win in a monumental employment case against Uber. But the Government need to be more proactive and champion the rights of the self-employed and the responsibilities of employers; the Government should not just pick up the pieces when things fall apart.

We have called out these actions, and our words in this place have been heard. They have been heard by top corporate executives who have flocked to me after debates to try and explain away their companies’ behaviour. Our words have been heard by thousands of staff nationwide whose pay has been cut unscrupulously and who have felt alone and ignored. Our words have been heard by countless employers who have been deterred from pursuing such changes for fear of the reputational damage that they would cause. Today, I hope these words will also be heard by the Prime Minister and the Government, and that we will all realise that a society in which the poorest flourish is one in which we all benefit.