Fight for £15
A plan for wage growth
The government must deliver:
- A macroeconomic approach which boosts demand and creates growth
- A plan to strengthen and extend collective bargaining across the economy including introducing fair pay agreements to set minimum pay and conditions across whole sectors
- A life-long learning and skills strategy to fill labour shortages, boost productivity and so workers can update their skills throughout their working life
- Corporate governance reform to prioritise long-term sustainable growth, rather than short-term focus on shareholder returns
- Industrial and trade policies to promote good jobs and ensure that businesses compete on a level playing field
- Making decent jobs a requirement of all government spending and procurement.
A plan for a £15 minimum wage
The government needs to achieve two key things to deliver a £15 minimum wage:
- Set a new minimum wage ‘bite’ target at 75 per cent of median hourly pay. The bite of the minimum wage has increased throughout its history, beginning at 47 per cent and now on its way to 66 per cent by 2024.
- Deliver a return to normal wage growth. Recent progress on the minimum wage has been dampened by stagnant wage growth. But it is only since the financial crisis that wage growth has stalled. From 1970 until 2007 real wages grew by an average of 33 per cent a decade before falling below zero in the 2010s.
Between 1997 and 2010 nominal wages grew by an average of 3.8 per cent a year. At the very least, we need to see this level of growth again. This would deliver a £20 median wage by 2030. In combination with a 75 per cent bite, it would establish a £15 minimum wage. This level of wage growth is conservative following over a decade of stagnation. Higher levels of sustained pay growth are needed to recover lost ground and to help workers cope with soaring living costs now.
Workers covered by collective bargaining will see their wages rise to these levels more quickly. In sectors with good collective bargaining coverage, a £15 floor can be implemented earlier. Fair Pay Agreements should be rolled out, and trade union restrictions should be lifted, so workers can win higher pay ahead of the minimum wage.