Suspend the minimum wage and employ more people
What’s worse, low wages or no wages? Shouldn’t the minimum wage rise due in October be suspended for people prepared to accept less if the company pledges to employ more?
For young people in particular, getting a job now is not only important to give them some money in their youth, it is key to getting them on a career ladder that makes them employable in future and allows them to be self-sufficient, hopefully progressing to pay well above the government minimum. Those that miss out on employment in early years miss out for ever.
There are now nearly 1m Neets – people not in education, employment or training. One in six people between 18 and 24 are in that category and another batch of school-leavers is joining the queue. If lowering the minimum wage meant that more would have jobs it would be a social gain – not least to those who move into employment.
And with inflation negative, even freezing the minimum wage at current levels, that would still be an increase for the worker.
The adult minimum is due to rise to £5.80 an hour with the “development rate” for 18 to 21 year olds increasing to £4.83 and younger people receiving £3.57. Since its introduction in 1999 the minimum wage has well outstripped inflation, so a freeze now that we have recession would still leave pay ahead of the original levels in real terms. And, in case a freeze seems unthinkable, there have been previous years when the rate for 16 and 17 year-olds has not been increased.
Minimum pay is promoted as a social leveler, just like maximum pay – and usually by the same lobby groups. But both must be subject to market forces and at present, the supply of labour exceeds the demand for it. If the balance was the other way round, then young people would receive a market rate above the minimum; now that there is a surplus of would-be workers the minimum should be suspended so long as employers genuinely increase their workforce.
