Thursday, 31 January 2013

1,800,000 workers in the UK earn LESS than the minimum wage.


In the first 13 months of the Work Programme, 878,000 people were placed on it and expected to work for nothing but their benefits (see here). Today, we learn that 520,600 apprenticeships were commenced in the last year (see here). We already know that 288,000 workers are paid less than the minimum wage for routine jobs in the UK (see here). To top it all off, 111,000 people work for the family business but do not earn a penny piece (see here). In total, therefore, and excluding unpaid interns, there are 1.8 million workers in the UK who are employed for less than the minimum wage. Apprentices earn a statutory £2.60 per hour, although in some cases they are paid more at the discretion of the employer. But today, I want to focus attention on the damage we do to our economy by not paying the folk mentioned above, a proper wage.

If we paid each of the 1.8 million workers above a minimum wage, it would add nearly £7 billion to the UK economy and create close to 0.5% of growth (GDP) a year. It would mean on average paying Work Programme attendees £6.19 for their 6 week placements. The £2.60 for apprentices would only have to be uprated by a couple of pounds an hour given that most apprentices are under 21, and therefore subject to a lower rate of minimum wage. For employers exploiting workers by paying them less than the minimum wage, it would mean them forking out an extra £1.5 billion a year. We have a chance to boost our economy from the bottom up. All of these people are guaranteed to spend the money they would be given in wages, thus the knock on benefits are guaranteed. The moral argument to do so is also overwhelming. If you ever wonder why Tory boasts of creating a record number of jobs do not make our economy perform any better, then your clue is above.

I was unable to add the number of unpaid interns to list, because to a large extent they are invisible in our economy, but if any one has reliable figures please pass them my way.

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