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Employment

£15 minimum wage: Who is calling for it and could it happen?

Calls for a £15 minimum wage have increased as inflation causes wages to stagnate. But is it feasable? Here’s everything you need to know.

With inflation lowering the value of pay packets every month and a cost of living crisis forcing up the price of essential items, much of Britain needs a pay rise

There has been a strong campaign to raise the minimum amount employers can pay their workers to the Living Wage Foundation’s independently calculated “real living wage” of £9.90 and £11.05 in London, but some are saying that is still not enough. 

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The national living wage  – the legal minimum for those aged 23 and above – currently stands at £9.50 per hour, however the national minimum wage is lower, at £9.18 per hour for those aged 21 or 22. Employees aged 18 to 20 can expect to be paid a minimum of  £6.83, and those under-18 get £4.81.

So, who is calling for a £15 minimum wage, why, and would it actually work?

Who is calling for a £15 minimum wage?

Union Unite put forward a composite motion to be debated at the Labour Party Conference, which, among other motions such as banning fire and rehire, calls for the minimum wage to increase to £15 per hour. It was passed unanimously in September 2021.

The wide-ranging motion also demanded stronger union rights, higher taxes “on the very wealthiest”, an end to zero-hour contracts and a “better work-life balance”.

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The £15 minimum wage section of the motion was submitted by the Bakers, Food and Allied Workers Union, and adopted by grassroots group Momentum into their eight proposals for the September conference. 

Former leader Jeremy Corbyn has also told the BBC that a £15 an hour minimum wage is something the party “should be supporting and campaigning for”.

Why are there calls for a £15 minimum wage? 

Increasing the minimum wage to £15 an hour would lift huge numbers of working people out of poverty, remove the burden of welfare from the taxpayer and create an environment for small businesses to thrive, according to grassroots movement Labour movement Momentum who are supporting the motion. 

“We’ve got to be more ambitious in our approach towards the national minimum wage,” MP McDonald told PoliticsJoe. 

“Ten pounds an hour is what we were talking about in 2014, 2015. The world’s moved on, prices are rising, we see every day the pressures working people are under.”

Union GMB has campaigned for £15 minimum wage for care workers to ensure safe staffing and a high workforce uptake. The union also argues that increasing their wage could further motivate care staff who face getting vaccinated against coronavirus, or losing their job, after the vaccine was made mandatory for care home workers. 

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“We’ve said all along the best way of tackling vaccine hesitancy within the workforce is by properly valuing and paying workers a salary that better reflects the valuable work they do. £15 per hour no less”, said Kelly Andrews, GMB national care lead.

How much would £15 per hour be per year/ as a salary? 

Someone working 40 hours per week, and earning £15 per hour, would earn a yearly salary of £31,200 before tax or other deductions.

This is roughly £200 less than the median annual pay for full-time employees, which stood at £31,46 for the tax year 2019/2020, according to ONS statistics. While 2020 was a tough year for many jobs, “annual pay estimates are largely unaffected by the coronavirus (Covid-19) pandemic” according to the report.

Is a £15 minimum wage affordable for businesses to pay to their employess?

Think-tank the Progressive Economy Forum (PEF) claims to have done the maths in calculating how a £15 minimum wage would be affordable for the government to implement by 2024.

The researchers found that a £15 minimum wage would save the government £4.2bn on benefits payments that top up the wages of people on low-incomes, allowing it to cut taxes on small businesses, and raise an extra £30bn in taxes.

They argue that by lowering National Insurance Contributions for small businesses, the government would reduce their tax burden and compensate for the increase to the cost of wages. For larger businesses, they said “there is significant ‘slack’ available on their balance sheets to absorb increased labour costs.”

Co-author of the PEF’s report making the case for a £15 minimum wage, James Meadway, said that a £15 minimum wage by 2024 would make up for a “lost decade” of stagnating wages.

He also positioned the policy as a way to “Level Up” the north of England, which would boost the incomes of 51 per cent of employees in the area, compared to 33 per cent of workers in London. Across the country, 14 million people would see their pay increase under the proposals. 

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What impact would a £15 minimum wage have on jobs

Given that more than half of the entire workforce of the UK earns less than £15 per hour at present, some have asked whether a £15 minimum wage would be fair.

The median hourly earnings for all employees in 2020 was £13.68 per hour. So, not only would professions such as cleaners, waiting staff, and retail employees who have long been paid the minimum wage receive a hefty pay increase, so too would many in graduate level jobs.  

Breaking salaries down to hourly wages, the average salary for ambulance staff (excluding paramedics) is £12.33. Legal secretaries earn on average £10.75 per hour and finance officers £12.90. 

The average teaching assistant earns a salary of £17,904, which breaks down to just £8.61 per hour, 30p less than minimum wage for someone above 23 years of age. 

There are two key concerns for raising the minimum wage to such levels, explains Professor of Economics at LSE, Alan Manning.

Firstly, if employers are unable to pay wages at the level mandated by the government, they will have to employ fewer staff, he said, leading to redundancies or a halt in hiring new workers. 

Secondly, Manning says it could impact on motivations to get jobs which require higher levels of training, skill or stress.

“Fifteen pounds an hour is probably more than what many nurses are paid, and they’ve gone through three years of training. If you suddenly say that any job pays £15 an hour, why is anyone going to train as a nurse?” Manning asked. 

“It’s risky in the sense that just because it sounds good, that doesn’t necessarily mean it’s going to be good in practice.” 

However, those campaigning for a £15 minimum wage “are not talking about the minimum wage today, they’re talking about aspirations for the future,” Manning added. 

“I would try ten pounds an hour, have a look at what happens then, and if it’s all okay, you can push it a bit more, you know, a more gradual approach up to 15 pounds.”

When could we see a £15 minimum wage implemented? 

The next general election is set for May 2 2024, and since Labour would not be in a position to make changes to the national living wage until then, it would be from this point that a £15 minimum wage could, hypothetically, be on the cards. 

“We will make an assessment of that, which I think is the responsible thing to do, closer to the general election” said Nick Thomas-Symonds, the shadow home secretary.

Ahead of the next general election, Labour would be willing to “make an assessment” of whether a £15 minimum wage is viable

The national wage will eventually reach £15, says The Resolution Foundation, however it is not an “an economically viable policy in the short-to-medium term.”

If the national minimum wage were to increase yearly 4 per cent – a fairly typical rate of increase for the minimum wage – it would reach £15 per hour by the mid-2030s.

“We’re basically saying that £15 is unviable in the short-term, and inevitable in the long-term,” a spokesperson told The Big Issue. 

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