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When the left opposed a minimum wage When the left opposed a minimum wage
(about 4 hours later)
By Philip Cowley Professor of parliamentary government, University of Nottingham. By Philip Cowley Professor of parliamentary government, University of Nottingham
The National Minimum Wage celebrated its tenth birthday earlier this year.The National Minimum Wage celebrated its tenth birthday earlier this year.
The minimum wage is in its tenth yearThe minimum wage is in its tenth year
For all the controversy when it was first introduced, amidst predictions that it would lead to an additional two million unemployed, it is now almost impossible to find any senior political figure who wants its repeal.For all the controversy when it was first introduced, amidst predictions that it would lead to an additional two million unemployed, it is now almost impossible to find any senior political figure who wants its repeal.
The minimum wage quickly became broadly accepted across the political spectrum in the UK, by all the mainstream parties, the unions and most business organisations.The minimum wage quickly became broadly accepted across the political spectrum in the UK, by all the mainstream parties, the unions and most business organisations.
Yet it took years of campaigning before the minimum wage became law, and the initial opposition came not from the political right or from business, where you might expect, but from the left.Yet it took years of campaigning before the minimum wage became law, and the initial opposition came not from the political right or from business, where you might expect, but from the left.
In the 1970s and early-1980s, most British trade unions were adamantly opposed to the concept of a minimum wage.In the 1970s and early-1980s, most British trade unions were adamantly opposed to the concept of a minimum wage.
No consensusNo consensus
They feared that it would undermine the cherished principle of free collective bargaining and that it would pull down pay rates above it, reducing so-called "differentials", the gap between the skilled and unskilled workers.They feared that it would undermine the cherished principle of free collective bargaining and that it would pull down pay rates above it, reducing so-called "differentials", the gap between the skilled and unskilled workers.
And there was self-interest at work too. If a minimum wage protected people's wages, then what was the incentive to join a union?And there was self-interest at work too. If a minimum wage protected people's wages, then what was the incentive to join a union?
One exception was the public services union NUPE, which represented many of the lowest-paid workers. But it took them decades of arguing and lobbying before they managed to win over the rest of the union movement, and get the policy adopted at both TUC and Labour Party conferences.One exception was the public services union NUPE, which represented many of the lowest-paid workers. But it took them decades of arguing and lobbying before they managed to win over the rest of the union movement, and get the policy adopted at both TUC and Labour Party conferences.
The initial figure, an hourly rate of £3.60 for adult workers, and just £3.00 for 18-21 year olds, was considered too low by the unionsThe initial figure, an hourly rate of £3.60 for adult workers, and just £3.00 for 18-21 year olds, was considered too low by the unions
Even into the 1990s, there was no consensus about the minimum wage on the left.Even into the 1990s, there was no consensus about the minimum wage on the left.
Can you guess which current cabinet minister wrote this? "The allure of a minimum wage is deceptive and should be resisted ... Fostering a high wage, high skill economy is the only way to reverse Britain's relative economic decline and to generate the resources to eradicate poverty. But the minimum wage is not the answer. If anything the minimum wage will make it even harder to achieve these ends."Can you guess which current cabinet minister wrote this? "The allure of a minimum wage is deceptive and should be resisted ... Fostering a high wage, high skill economy is the only way to reverse Britain's relative economic decline and to generate the resources to eradicate poverty. But the minimum wage is not the answer. If anything the minimum wage will make it even harder to achieve these ends."
The answer: Ed Balls, writing in 1991.The answer: Ed Balls, writing in 1991.
NUPE's initial goal was for a set rate: a minimum wage of two thirds of average earnings.NUPE's initial goal was for a set rate: a minimum wage of two thirds of average earnings.
And the union reached agreement with the then shadow chancellor John Smith, in 1991, at a meeting at Magdalen College, Oxford - the minimum wage would be set to 50% of male median earnings initially, rising to two-thirds over time.And the union reached agreement with the then shadow chancellor John Smith, in 1991, at a meeting at Magdalen College, Oxford - the minimum wage would be set to 50% of male median earnings initially, rising to two-thirds over time.
Prudent approachPrudent approach
Things didn't work out like that, though. Smith died in 1994, and his replacement, Tony Blair was having none of it.Things didn't work out like that, though. Smith died in 1994, and his replacement, Tony Blair was having none of it.
The set rate went out of the window and in came a Low Pay Commission, which would establish a rate each year after negotiation and research.The set rate went out of the window and in came a Low Pay Commission, which would establish a rate each year after negotiation and research.
The initial figure, an hourly rate of £3.60 for adult workers, and just £3.00 for 18-21 year olds, was considered too low by the unions. Yet the level was crucial.The initial figure, an hourly rate of £3.60 for adult workers, and just £3.00 for 18-21 year olds, was considered too low by the unions. Yet the level was crucial.
As George Bain, the first chair of the Low Pay Commission, said at the time any idiot can set a minimum wage. What matters is getting the level right: high enough to protect the low-paid, not too high to damage the economy. And initially, the commission erred on the side of prudence.As George Bain, the first chair of the Low Pay Commission, said at the time any idiot can set a minimum wage. What matters is getting the level right: high enough to protect the low-paid, not too high to damage the economy. And initially, the commission erred on the side of prudence.
The CBI's John Cridland, another member of the commission, says that its activities were a little like the ranging shots contestants used to take in 1960s TV show The Golden Shot.The CBI's John Cridland, another member of the commission, says that its activities were a little like the ranging shots contestants used to take in 1960s TV show The Golden Shot.
The first one might have been too low, and the level soon crept up faster than prices or earnings.The first one might have been too low, and the level soon crept up faster than prices or earnings.
But the flexibility of the approach, and the initial low level, helped calm business concerns and won over the CBI and other employer organisations in a way that a fixed rate might not have done.But the flexibility of the approach, and the initial low level, helped calm business concerns and won over the CBI and other employer organisations in a way that a fixed rate might not have done.
Of course, the minimum wage is not universally accepted, especially with the UK in recession. The Conservative MP Christopher Chope recently introduced a private member's bill which would have allowed people to opt out of the minimum wage.Of course, the minimum wage is not universally accepted, especially with the UK in recession. The Conservative MP Christopher Chope recently introduced a private member's bill which would have allowed people to opt out of the minimum wage.
But despite their vehement opposition before the 1997 election the Conservatives accepted the minimum wage within a year of its introduction and the party leadership has made it clear that it has no plans to repeal it.But despite their vehement opposition before the 1997 election the Conservatives accepted the minimum wage within a year of its introduction and the party leadership has made it clear that it has no plans to repeal it.
And for all union opposition initially, you now cannot find a union that would repeal the minimum wage.And for all union opposition initially, you now cannot find a union that would repeal the minimum wage.
Professor Philip Cowley presents the first in a three part series, Where did it all go right?, on 31 August at 2000 BST on Radio 4.Professor Philip Cowley presents the first in a three part series, Where did it all go right?, on 31 August at 2000 BST on Radio 4.