LIVING WAGE UP

Today increases in the living wage have been announced. Outside London it rises to £8.25 an hour and in London £9.40 an hour.

Slowly the wage is spreading. 2000 businesses are now signed up to it. They include major national companies like Barclays Bank and Lidl and in Cornwall a growing number of local companies and organisations such as Cornwall Council, Volunteer Cornwall, and St Merryn Holiday Park.

However, a large proportion of workers in Cornwall, fulltime and part time, are paid less than the living wage. The Office for National Statistics (ONS) says that last year 31.6 percent of all workers in Cornwall were paid less than the then living wage.

Let us welcome the progress but push for more to get it.

Note that this is the real living wage not George Osborne’s “national living wage” which will be £7.20 an hour for those over twenty five.

POORLY PAID IN CORNWALL

The Office for national statistics (ONS) has today published data showing that last year there were about 53 000 jobs in Cornwall paying less than the then living wage hourly rate of £7.65 for those aged twenty one and over. This represented 31.6 percent of all Cornwall jobs.

Of the 293 local authorities in England outside London, Cornwall is at 250 where 1 is best (lowest proportion) and 293 is worst (highest proportion).

The voluntary living wage, set by the Living Wage Foundation, is higher than the mandatory minimum wage and George Osborne’s recently announced and misleadingly called national living wage.

Five of the thirty three local authorities in London, where in April 2014 the living wage set by the Mayor of London, was £8.80 an hour, had a higher proportion of jobs below the wage than Cornwall.

The estimates of percentages are based on the 2014 provisional ASHE data.

The data shows that poor wages are a lively issue in Cornwall. They underlie many other difficulties for many here, including poverty and housing and choices in everyday living. Cornwall Council and town and parish councils should scrutinise their spending to ensure their poor get a very fair share and none is wasted on frivolous projects.

I should like to see the parties in Cornwall responding positively to the issues raised in this post and in my post of the other day Deprivation in Cornwall 2015 and to the risks of increasing poverty for children that I discussed in the post Assaulting poverty or the poor – that is, responding to the issues (not to me) with specific and material ideas for at least mitigation of distress. Let’s hear the clarion from Labour, Liberal Democrats, Mebyon Kernow, and the Greens here in Cornwall, and, yes, the Conservatives and UKIP here too.

NOTES
ASHE: Annual survey of hours and earnings (ONS)

The ONS explains that the jobs are for employees aged eighteen and over paid at adult rates of pay; the coefficient of variation (cv) shows that the Cornwall figures are “precise”.

PAY FALLS IN CORNWALL

The mean average gross wages for workers resident in Cornwall during the recession from 2008 to now have fallen in value by 12 percent. The data is published by the GMB trade union here.

For England the fall is 14.6 percent and most of the twenty areas with the largest falls are in London and the south east of England.

Although the nominal figure for the Cornwall wages has risen, inflation of 17.8 percent in the period has resulted in the fall in real value. The wages are from Table 8.7a of the ASHE data of the Office for national statistics (ONS). The fall period is April 2008 to November 2013.

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AVERAGE PAY IN CORNWALL 2013

The Office for national statistics (ONS) has published the provisional ASHE data for 2013.

Table 8.7a shows that the annual, median, gross pay for men and women in fulltime employment and resident in Cornwall was £22 246 [revised to £22 234: see 2014 average pay post].  The mean was  
£26 239.

For England as a whole the figures are £27 375 and £33 975.

The tables also give pay by place of work and by constituency and separately for men and women and for part time workers and at different percentiles.

Average pay in Cornwall 2014 is here.
ASHE: Annual survey of hours and earnings

FAIR PAY IN CORNWALL

Both Labour and Libdems in Cornwall are opposing the Tory Libdem government’s proposals for localised public sector pay, that is public sector pay that takes into account pay in the private sector which outside the southeast of England appears to be generally lower for comparative work. In effect the proposals are not about supplementing national public sector pay levels but cutting that pay to the levels of private sector pay in each locality. Localising pay will mean cutting pay for most workers affected.

They are not exactly proposals but nor are they a vague idea. Some preparatory work is undertaking (see Note at the foot of the post for examples). However, Alastair Hatchett has challenged convincingly some of the myths about regional pay and how private sector pay is arrived at.

The Libdems in Cornwall are opposed to cornishing pay. I welcome that but although Nick Clegg opposes localised pay, Danny Alexander, the Libdem chief secretary of the Treasury, apparently approves it: see here for Clegg and here for Alexander. The three Libdem MPs for Cornwall constituencies were among the Libdem signatories to a letter opposing localised pay published in the Guardian 16 May 2012. Way back in the days when the mandatory minimum wage was originating the Libdem party advocated a regionalised one; that would have institutionalised low pay for workers in Cornwall.

Labour in Cornwall is opposed to cornishing pay. I welcome that but the Labour government began the process of localising pay and apparently even pondered localising the minimum wage.

All right, let us lethe the unprogressive past.

The Libdems apparently have a motion for Cornwall unitary council opposing cornished pay and advocating fair pay. All parties love the word fair, so redolent of righteousness and justice yet so comfortably vague and airy and elastic in meaning. I oppose localised pay and very much welcome the Libdem move but let me say bluntly that more is needed than that opposition: let me point out that the living wage for Cornwall is £7.20 an hour and I have argued before that Cornwall Council, even in these days of austerity, should give a lead and move to the living wage. Perhaps the Libdem party could put some solidity into fairness by pressing Cornwall Council to adopt the living wage; if not, perhaps Labour could propose an amendment for the living wage. Let fairness means something solid, a living wage.

Note

*Preparatory work: for example, these very recent replies to questions about plans to introduce regional pay
(a) by the Foreign Office minister (Hansard 19 June 2012 column 911W)
“The Foreign and Commonwealth Office (FCO) exits the pay freeze in 2013 and will at that point look to move to more local, market facing pay. We are awaiting further data and guidance from Efficiency and Reform Group in Cabinet Office that will allow my officials to look at how the FCO’s pay structures compare with local market data. Once this is published we will work with Cabinet Office and Her Majesty’s Treasury colleagues to produce a three year pay strategy.”

(b) by the lord chancellor (Hansard 19 June 2012, column 918W)
“Pay for some staff in HM Courts and Tribunal Service is already based on regional market rates.
Plans to move to more local market influced pay structures are being considered as part of proposals for pay reform within the Ministry and its Executive Agencies. The first stages of implementation are scheduled for summer 2013 as the Department exits the pay freeze.”

*The parliamentary record for Labour’s initiation of regional pay is here, Hansard 19 June 2007 column 1708W:
“Mr Illsley: To ask the Minister of State, Ministry of Justice if she will make a statement on the introduction of regional pay rates for court staff.
Ms Harman: Regional pay is a reality in the economy as a whole-pay variations by location are not new. The system we are introducing offers greater coherence, greater transparency and enables us to target public money most effectively on those areas where there is greatest need. It will allow us to offer competitive salaries to attract and retain staff with the skills we need, where we need them.”

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A PROPER CORNISH WAGE

The Resolution Foundation and Institute for Public Policy Research (IPPR) have produced an informative study of the likely financial effect of moving to a living wage on various sectors of the economy. This shows that while in some sectors it would be very difficult to move to a living wage in one move, getting there over time is realisable.

I believe that the gradual approach is right for Cornwall to move to a living wage.

I think Cornwall Council should lead here. It should state that its aim is to have all its employees on the living wage, currently £7.20 an hour. By the way, that £7.20 assumes that people claim all the benefits and credits they are entitled to; without those extras I think the wage outside London would be around £9 an hour.

It is time the political parties in Cornwall, well at any rate those who describe themselves as progressives, unequivocably argued for the living wage and began to press Cornwall Council. The national organisations in Cornwall such as banks and supermarkets should be pushed too. Companies here advertising work at less than the living wage should be encouraged to think how they could get to pay it.

As we see the mandatory national minimum wage erode and the cornishing of pay, it is more important than ever to campaign for a decent living wage. It’s a question of social and economic justice. It makes some of the preoccupations of local politics seem small beer.

Earlier posts on the living wage
The pro-Cornish wage 31 August 2010
A living wage for Cornwall 17 May 2011
Progress to a living wage 29 June 2011

And on low pay in 2011
See Working for nothing – the truth about low pay in the UK in the Observer for 2 October 2011
Here’s the research from the Resolution Foundation Low pay Britain September 2011.

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CORNISHING PAY

I noted way back in this post in 2009 that the Conservatives were seriously thinking about localised pay (and benefits) and in several posts I have explored the issue, especially the advantage for public sector workers in Cornwall of national pay rates. I have listed those posts at the foot of this one. Now the Tory Libdem government is preparing to implement localised pay in this week’s budget, firstly in the civil service but soon for other public sector workers currently with national pay agreements like teachers and nurses.

Economic efficiency
Public sector workers will have their pay Cornished, that is cut or frozen until it matches local private pay. The justification for this is economic efficiency, a level playing field in pay between the public and private so that one does not artificially out-recruit and out-retain the other. In most of Britain this will mean public sector pay ultimately falling.

8 percent gap?
The advantage of public over private pay averages about 8 percent in terms of hourly pay. This hides variation. The explanation for 8 percent is set out in this ONS study which reaches the figure after taking into account differences in the two sectors such as age and qualifications. That study does have some significant caveats; for example, the ASHE data relates only to employees not to self-employed people and the data is about April which is a time when bonuses in the private sector are not paid, both of which are likely to reduce the gap.

The regional figures for the public and private hourly pay gap in April 2011 are in Table 25.5a here.

Consequences for Cornwall
If public sector pay in Cornwall is cut or stalls to reflect the lower private sector pay, will Cornwall still attract, for example, the best nurses and teachers and administrators to build a career here? Will the landscape attractions of the county and the way of life outmatch the high cost of buying a house here and the increasing cost of petrol and travel to work in a dispersed county with poor public transport on lower pay? I don’t think so. Will teachers and nurses on Cornish pay be able to afford a suitable house and if they can’t will they come here? I think some people here overestimate the comparative attractiveness of Cornwall; there are other places in England as beautiful and with an attractive way of life – and with lower housing costs. Man cannot live on surf and Ozymandias engine houses alone.

Of course occupational pensions, based on career average pay, will depend on people’s pay too so it is not only now that living standards will be affected but in old age too.

Localised public sector pay could turn out to disastrous for Cornwall, adversely affecting the quality and performance of its public sector.

Taking money out of the Cornwall economy
What the Tory Libdems will be doing is taking money out of the Cornwall economy: those Cornished public sector workers will have less to spend and that will not help our county economy. Cornwall GDP is 72 percent of the EU average so for a third time we shall qualify for EU aid (though the GDP figures do not well reflect individual experience but rather the disproportionate number of retired people and the nature of jobs here). I suppose removing the pay advantage of the public sector here might in theory encourage the private to step up its endeavours and be able to recruit the talented more easily. A decade of EU aid appears to have achieved too little economically that is solid and lasting and does taking money out of such an economy make sense? Isn’t there a lively danger of government localisation trapping the people of Cornwall in a longterm low wage economy?

Party politics
I think I should add that regionalising pay and benefits is not a clear-cut party political issue. Labour between 1997 and 2010 considered regionalised pay and writing in the Daily Telegraph this 28 January Liam Byrne, Labour’s shadow for Works and Pensions, argued for a regionalised benefits cap asking, “How can a ‘one-size-fits-all’ cap be fair to working people in both London and Rotherham?” And see this 2006 report that says that “Since at least 2003, Gordon Brown has been toying with the idea of having different regional pay settlements across the UK.”

Sources

ONS ASHE data about regional pay Table 25 for April 2011 (Table 25.5a shows that male fulltime gross median hourly pay rates in the south west region were £15.15 in the public sector and £11.50 in the private sector. The mean average figures were £17.41 and £14.04)

Growing number of myths about local pay determination Alastair HATCHETT 17 January 2012

Estimating differences in public and private sector pay Andrew DAMANT and Jamie JENKINS July 2011

Public sector pensions and pay Carl EMMERSON and Wanchao JIN February 2012

Regional pay: Can it work this time?Stephen BEVAN 30 November 2011

Earlier posts

Cutting Cornwall 1 December 2011

Localising benefits 31 July 2010

Tory-Libdems to localise NHS pay in Cornwall 19 July 2010

Vote Tory today, cry tomorrow 1 February 2010

Tories eye benefits and wages in Cornwall 6 September 2009

And see this (‘£7,000 pay gap for Westcountry workers’ in Western Morning News 16 December 2011)

ADDENDUM 23 March 2012: This is the NHS employers organisation submission to the NHS pay review body on market facing pay, March 2012

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CUTTING CORNWALL

Way back in 2009, before the general election, I explored the itch of the Tories to localise benefits and public sector pay, to end the setting of them at a largely uniform, national standard and to have them set them at local levels. Now it isn’t just the Tories of course; the Liberal Democrats are up to their elbows in this localisation too.

I returned to this topic over several posts and I have put links to them at the foot of this one.

Now the itch has grown. In his autumn statement George Osborne has said the Tory Libdem government will move to end national pay settlements and localise them and thus in places like Cornwall stifle increases. No, he didn’t say it like that. He talked of bringing public sector pay “in line with local labour markets,” how public sector pay could be made “more responsive to local labour markets,” and how “more local market-facing pay” (yes, really) could be introduced into the civil service. Read it in paragraph 1.110 in the autumn statement. Of course for higher paid people market-facing might mean more money but not for most people in the public sector.

What will be the actual result of the local-labour-market-facing localisation?

Let me restate the arguments about pay of my earlier posts. Cornishing public sector pay (and benefits) carries the risk of large disadvantages for many people in Cornwall. Cornwall is in general a low-pay county; average pay here is lower than in much of England (see the 2011 ASHE data.) Many people in Cornwall gain from national standards in wages. The levels of wages for people in the public services here, like nurses and teachers and civil servants, are set by national standards and comparisons and negotiations not by what happens in the local private sector. For example, Cornwall local private sector wages are not used as comparators to decide what to pay a teacher or tax inspector here. Localising their pay makes it vulnerable to local competitive impact, that is, lower pay here outside the public sector might draw down Cornwall public sector pay below national benchmarks.

Localisation would be a way for a Tory Libdem government to stifle longterm public sector pay and benefits in places like Cornwall, to cut us off from progressive increases elsewhere. I think the Tories-Libdems are coming to see localism as a way of cutting public expenditure. Local variations in public sector pay (and benefits and even the minimum wage) might seem reasonable. After all, local living costs do vary and market pay varies. However, the Tory Libdem approach appears not to be about topping up mandatory national payments in areas of high living costs or influencing private sector low pay upwards. In practice the localising of payments would be seized as an opportunity to cut back public sector pay costs. Even within Cornwall we might have a contentious post code pay and benefits lottery to reflect variations in housing costs and private sector pay in different parts of the county.

If this Tory Libdem market-facing localisation happens, and that is most likely, I think it will have a damaging effect on the living standards of many people in Cornwall already reeling from austerity. Let’s see what the parties and groups in Cornwall have to say.

ADDITAMENTUM 8 December 2011: The Guardian of 8 December 2011 has the localisation story.

Earlier posts

Tories eye benefits and wages in Cornwall 6 September 2009

Vote Tory today, cry tomorrow 1 February 2010

Tory-Libdems to localise NHS pay in Cornwall? 19 July 2010

Localising benefits 31 July 2010

And see this (‘£7,000 pay gap for Westcountry workers’ in Western Morning News 16 December 20110).

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A LIVING WAGE FOR CORNWALL

A few months ago I wrote about the pro-Cornish wage, advocating a living wage for Cornwall. Labour’s national minimum wage of £5.93 an hour, which rises to £6.08 in October with the qualifying age for this full amount at twenty one, is a godsend for many workers here but it is not enough for a decent standard of living. In London the Greater London Authority (GLA) has adopted the living wage and the supportive Conservative mayor, Boris Johnson, has just increased it to £8.30 an hour. Around a hundred other firms have adopted it and so have University College London and the House of Commons, and London underground cleaners also benefit.

We have to be economically realistic but we also have to aspire to economic and social justice. There are motivational and production advantages too. Cornwall Council is best placed to take the lead on the living wage in the county and it is time to push the council to formally set the adoption of a Cornwall living wage for itself as a serious aim and to seek to implement it in its contracts. The RCHT and university should get involved. I think national companies will only respond nationally.

A practical start would be for the council to confirm what the Cornwall living wage would be. The groundwork done by the GLA and for the Joseph Rowntree Foundation could be readily adapted for Cornwall (see Notes below).

Let us also see the political parties and unions in Cornwall make the adoption of a Cornwall living wage their policy and start campaigning for it. Let us see Cornwall councillors sign up to it. At the same time let us see a push for it among the major local employers in Cornwall.

Notes

Here is an excellent list of reasons to support the living wage.

You can read about the London living wage and how it is calculated in A fairer London: the 2011 living wage in London. And A minimum income standard for the UK 2010 is research for the Joseph Rowntree Foundation looks at what income would enable most households to achieve “a minimum socially acceptable standard of living”.

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PAY RISE FOR CORNWALL COUNCILLORS ?

UPDATE 27 July 2010: the councillors unanimously voted against an increase in their pay.

ORIGINAL POST 23 July 2010
The 27 July 2010 meeting of Cornwall Council is to consider an increase in councillor pay – the official term is allowances. At present the basic pay is £12 128 a year. The Local Government Association has told councils that, based on a rise in ASHE national median pay, there could be a rise of 2.3 percent in the councillor day session rate. Details are set out in the agenda item linked at the bottom of this post.

The council agenda sets out three choices for the council on the 27th:
“(i) apply the LGA day rate increase of 2.3% to the Cornwall Council Members’ Allowances Scheme;
(ii) decline to apply the LGA day rate increase of 2.3% to the Cornwall Council Members’ Allowances Scheme; or
(iii) apply the LGA day rate increase of 2.3% to the Cornwall Council Members’ Allowances Scheme and leave it to individual Members to forego all or part of their allowance.”

We are embarking on cuts in public services in Cornwall. Pay for very many in the public and private sectors has been frozen. Some benefits are falling and some taxes are rising. Jobs are disappearing and unemployment, despite a seasonal uplift in Cornwall, will worsen. Some workers in Cornwall are facing the localisation of their pay. For many people in Cornwall life is becoming more difficult and less fulfilling.

In these circumstances the council should vote for (ii); it should decline the rise. That would mark its solidarity with the people it represent and demonstrate that it understand people’s difficulties. It would mark its leadership. To go for a rise in these straitened times would be indefensible. We’re all in this together, aren’t we?

I wonder whether we can improve the current payment scheme? The independent remuneration panel explains that it is related to rises in the national male white-collar median wage: see page 40, paragraph 33 of the panel’s report. I think that the pay scheme would be improved if it were based on the median pay of all employees not just males; and based on the median pay in Cornwall where the councillors serve. The argument for localised councillor pay is stronger now that the Tory Libdem government is applying localisation to many public sector workers in Cornwall. If councillor basic pay were a to-be-decided percentage of the appropriate median pay of all employees in Cornwall that would relate it directly to the pay of the people the councillors serve. Half the workers earn more and half less than the median pay; and there are various ways of measuring it as the ASHE tables show.

The Cornwall Council agenda item for the allowances is here. It is item 12, page 11 onwards.

This is the report of councillors’ pay considered at the Cornwall Council meeting of 19 January 2010: item 8, pages 25-74. It sets out how one gets from the day session rate to the Cornwall councillor basic pay. At this meeting Alec Robertson, the Tory leader of the council, said, “We all know that people are losing their jobs and we know that with budget cuts, we are trying to protect frontline services. An increase is just unacceptable.” Nothing has changed for the better in the last six months.
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