7 October 2014

  |  CBI North East


Low pay workers must not get stuck at bottom of pile

The CBI North East Regional Director, Dianne Sharp comments on last week's government announcement on the national minimum wage increase.

Low pay workers must not get stuck at bottom of pile

This column appeared in the Journal on Tuesday 7th October

The government announced last week that the national minimum wage will increase by 19p an hour to £6.50. Business Secretary Vince Cable accepted a recommendation from the Low Pay Commission that the minimum wage should increase by 3% and it is the first time in six years that the rise will be higher than inflation.

The new rates will help hard-pressed families, but can only be one part of the answer when it comes to raising living standards and ensuring everyone feels the benefits of growth.

Labour during their conference announced they would raise the National Minimum Wage to £8 during the next parliament, whilst the Liberal Democrats yesterday announced an intention to raise the rate for Apprentices. It is vital that any rise is based on sound economic evidence, so political parties should refrain from interfering in the future decision-making of the independent Low Pay Commission to avoid jeopardising the broad business support the National Minimum Wage enjoys.

However this focus on the entry pay point alone ignores the issue of people getting ‘stuck’ at this level, spending their whole working lives in low or minimum paid jobs.

Business and politicians must do more to help people progress in their careers and help them move into roles with increased pay. Who you are – the background you come from – still has too great an influence on whether you find a job, are able to hold onto it or see your wages rise. This is something we must address. Above all, people must have the chance to progress to better-paid work. This is an issue that concerns businesses as much as workers. Businesses are at their strongest when they make the most of all the talent available. If there are obstacles that lead to wasted talent and a less diverse workforce, then people are not fulfilling their potential and business can’t fulfil its potential either. They also need a pool of consumers to buy their products with the income those consumers have generated as employees.

The CBI has undertaken work over the summer with a wide group of stakeholders to develop ideas on how to give people the chances they need to break into more productive work that will pay better, the results of which will be launched at our National Conference next month.

Social mobility is not delivered through just raising the bottom rung of the ladder; it is achieved by designing a ladder capable of being climbed by the many not the few, regardless of where or how you get on it.